Market Snapshot: Egypt, the Dollar, and Bernanke

There is a lot going on this morning as far as geopolitical events are concerned. The Egypt protesting by the people continues to escalate. Protesters are now demanding the removal of Egyptian President Mubarak. It now appears as if there is similar protesting taking place in Yemen. Many reporters have made comments that this movement could stem throughout the Middle East and Africa and eventually effect Saudi Arabia. Saudi Arabia is the worlds largest oil producer and this could cause a further increase in energy prices around the world. Spot crude for March delivery is trading higher by just 0.27 cents to $91.12 a barrel. The highly popular United States Oil Fund (NYSE:USO) is trading higher by 0.13 cents to $38.31 a share ahead of the opening bell at the New York Stock Exchange.

The U.S. Dollar Index is rallying higher ahead of the market opening. The U.S. Dollar Index is trading higher by 0.44 cents to $77.60. When the U.S. Dollar Index rallies higher this will generally put pressure on the major stock indexes around the world. The rising U.S. Dollar Index will also put pressure on the CurrencyShares Euro Trust (NYSE:FXE). This morning as the European markets are all declining. The S&P 500 e-mini futures are trading lower by 1.50 points to 1298.50 before the opening bell. Should the U.S. Dollar Index decline after the opening bell it would prudent to watch for a stock market bounce. Remember the U.S. Dollar Index and the major stock market indexes will often trade inverse to each other.

This afternoon , the Federal Reserve Bank Chairman Ben Bernanke, will taking questions from the press. This new format by the central bank is likely due to the pressure from Congressman Ron Paul and his mandate to audit the Federal Reserve Bank. Many investors are blaming the Federal Reserve for the recent spike in inflation around the world. High inflation has recently sparked food riots in Tunisia, and Algeria. The central bank currently has the benchmark fed funds rate at zero percent since December 2008. The central bank has also pledged to buy $600 billion in U.S. Treasuries dubbed QE-3. There is even chatter that the central bank will expand it U.S. Treasury purchasing program further past it’s June 2011 completion. Quantitative Easing 3 could be on it’s way as hinted from the other Fed presidents.

This morning it would be wise to expect some commodities to be under pressure. Stocks such as Cliffs Natural Resources Inc (NYSE:CLF), Southern Copper Corp. (NYSE:SCCO), could be directly effected by the rising U.S. Dollar Index. Traders should look for all commodity stocks to trade higher should the U.S. Dollar Index decline.

About Nicholas Santiago 575 Articles


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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