Traders must always follow the action in the U.S. Dollar Index. As the U.S. Dollar Index goes the major stock indexes will generally do the opposite. Even this morning, when the U.S. Dollar Index rallies higher the major stock indexes deflate and decline lower. The SPDR Dow Jones Industrial Average ETF(NYSE:DIA) started the day around $124.75 and is now trading down to the $123.83 area, the decline in the DIA came once the U.S. Dollar Index started to trade higher on the day.
Many leading stocks will also fade or decline when the U.S. Dollar Index rallies higher on the day. Traders can just look at the stocks such as Exxon Mobil Corp.(NYSE:XOM), BP PLC(NYSE:BP), and James River Coal Co.(NASDAQ:JRCC), these stocks have sold off from their morning highs on the back of a stronger U.S. Dollar Index. Should the U.S. Dollar Index decline intra-day these stocks should inflate and trade higher.
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