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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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When asked about the breakout to new highs occurring in summer Davies stated, “This has the smell of 1998 when I was trading US government bonds and everyone was away on holiday and problems were beginning to brew. Stock markets were beginning to get violent in reaction to Russia’s problems and it all kicked off in the summer months and people were being called back to their desks.
I just have that same kind of feeling now. This is not one I want to fight, the market is a little bit rich now in the short-term, but this could be the baby that takes us over the course of the next four months to that very tantalizing level above $2,000. I really think this is the move.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/14_Ben_Davies_-_Gold_to_Break_Above_$2,000_in_the_Next_4_Months.htmlThe politicians made a crucial mistake when they even set a debt ceiling. The current debt in the United States stands at $14.5 trillion, meanwhile, President Obama wants to increase the debt ceiling by over $2 trillion to $16.5 trillion. This number is just to get the U.S. into 2012. The numbers that are being discussed are simply astronomical. The United States has added $4 trillion in debt under President Bush in 2008. President Obama added $2.52 trillion in his first 19 months in office. The question that everyone must ask themselves is why does the debt ceiling have to be so high? Why is the U.S. government spending more than it takes in each month? Why does the United States have so many military installations around the world? Why is the United States in five different wars right now? These are the questions that the United States citizens needs to ask politicians. In other words, why are you politicians wasting my money?
Most U.S. citizens do not really have a clue on what is going on in world. Most people are too busy playing with there i-phone or some other new fancy electronic gadget. People are too busy running around trying to get through week to week in this country. Capitalism has fallen by the wayside, that is obvious with the bank bailouts, auto bailouts, European Union bailout, unemployment bailouts, homeowner mortgage bailouts, welfare bailouts, and any other bailout that I may have forgot to write down. We live in a world of bailouts and we have had this system in place for the past 50 years.
Ladies and gentleman, the debt ceiling will be raised. It is really all politicians know how to do. It does not matter what party is in power, politicians love to spend other peoples money. Congressman Ron Paul(R-Texas) is the only politician that has opposed every debt increase and will not vote for it now. The rest of these politicians including the new freshman Tea Party members are already rolling over like a dog that is getting a biscuit treat. In any case, we can all enjoy the soap opera until the final deal is struck by the political elite.
Investors usually listen in closely for any hints that the central bank head could drop about future monetary policy and the message from Bernanke today was clear - the Fed stands ready to respond with more stimulus if needed. No one expected Bernanke to mention more QE directly which explains why the dollar fell aggressively after he said the Fed is prepared to respond with stimulus if needed. Although he still tried to straddle the fence by saying that the economy may also warrant less accommodation, these words were lost on the market as Bernanke's emphasis on the ways the Fed could ease implies that the door is wide open for more QE. According to the Fed Chairman, there are 3 different ways for the central bank to increase stimulus - 1) extending the low rate commitment 2) buy more securities and 3) cut interest paid to banks on reserves to encourage them to lend more.
