The most important chart that anyone can follow is a chart of the U.S. Dollar Index. The major stock indexes and most leading commodities will usually trade inverse to the world’s reserve currency. For over ten years now the general stock market direction has moved opposite or inverse to the U.S. Dollar Index.
This morning, the U.S. Dollar Index futures (DX-M2) topped out shortly after the opening bell rang at the New York Stock Exchange. When the U.S. Dollar Index declined that is exactly when the S&P 500 Index and the popular Dow Jones Industrial Average rallied higher. This is very evident by comparing a chart of the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP) against the ProShares Ultra S&P500 (ETF) (NYSEARCA:SSO), and the ProShares Ultra Dow30 (ETF) (NYSEARCA:DDM). Traders should remember that the opposite effect can be seen when the U.S. Dollar Index trades higher, the major stock indexes will deflate and decline lower.