Markets Bounce Early, Will Rally Hold?

The major stock indexes have caught an early bid higher this morning. Many Investors and traders are likely thinking that Ben Bernanke will say something positive when he begins his Humphrey Hawkins testimony this morning. Yesterday afternoon, the major stock market indexes jumped higher when rumors spread that some members of the Federal Reserve Bank were thinking about another quantitative easing program(QE-3). Obviously, there really isn’t anyone that believes the Bernank will say anything to to hurt the markets. Most of the questions that will be asked by the politicians are usually pretty easy for Chairman Bernanke.

The key to direction in this market will be the action in the U.S. Dollar Index. Should the U.S. Dollar Index decline or pullback then the major stock indexes will inflate and trade higher. On the flip side, if the U.S. Dollar Index rallies higher throughout the trading session then the major stocks indexes will deflate and trade lower. In short, the market will generally trade inverse to the U.S. Dollar Index.

If the U.S. Dollar Index declines throughout the session traders can watch for leading commodity stocks to trade higher. Leading commodity stocks such as ConocoPhillips (NYSE:COP), U.S. Steel Corp. (NYSE:X), and Cliffs Natural Resources Inc. (NYSE:CLF) will usually trade higher on the back of a weaker U.S. Dollar Index.

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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