Early Market Strength, Here Is Why

This morning, all of the major stock indexes are trading sharply higher. Traders and investors are in jubilee mode as there were a few take over announcements before the opening bell. Obviously, the major news was the Google Inc. (NASDAQ:GOOG) buyout of Motorola Mobility Holdings Inc. (NYSE:MMI) for $12.5 billion. While the take over news is dominating the headlines traders should continue to follow the U.S. Dollar Index.

The U.S. Dollar Index futures (DX U1) are trading lower by 0.71 cents to $74.03 per contract. As we all know by now, when the U.S. Dollar Index declines the major stock indexes will inflate and trade higher. This morning, leading stocks such as Exxon Mobil Corp. (NYSE:XOM), Southern Copper Corp. (NYSE:SCCO), and Cliffs Natural Resources Inc. (NYSE:CLF) are all trading higher at the start of the session. Traders should watch to see if the U.S. Dollar Index bounces off of the morning lows. Should the U.S. Dollar Index rally higher most of the leading commodity and energy stocks could pullback and deflate since these are most sensitive to the U.S. Dollar. As long as the U.S. Dollar Index continues to decline lower this morning the major stock indexes should remain inflated.

About Nicholas Santiago 576 Articles

Affiliation: InTheMoneyStocks.com

Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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