Stronger U.S. Dollar Index Stalls ISM Euphoria

The major stock indexes were all trading lower on the day before the ISM data was released. Once the ISM number was released the major stock indexes surged sharply higher. The Institute for Supply Management said that the index declined to 50.6% in August from 50.9% in July. While this ISM number is the worst number in quite a long time it is better than expected. More importantly, the U.S. Dollar Index has soared higher after the announcement, this is the reason why stocks have deflated from that initial move higher in the market.

When the U.S. Dollar Index trades higher on the session it is prudent to expect commodity and energy stocks to pullback. Leading stocks such as Freeport McMoRan Copper & Gold Inc. (NYSE:FCX), Southern Copper Corp. (NYSE:SCCO), and Cliffs Natural Resources Inc. (NYSE:CLF) have all pulled back from the intra-day highs. Should the U.S. Dollar Index decline or pullback throughout the trading session then these leading commodity stocks are likely to bounce higher. All traders should be watching the U.S. Dollar Index very closely.

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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