This morning the major stock market indexes are soaring higher ahead of the opening bell. This positive move comes after the market reacted positive to Chinese PMI last night. It is still amazing that the Shanghai Index has this much of an effect over the markets world wide. There are obviously other reasons for the large gap higher this morning such as the sharp decline in the U.S. Dollar Index. As many traders and investors know by now when the dollar declines the stock market indexes will usually inflate and trade higher. This decline in the dollar looks to be taking place today as many leading commodity stocks are sharply trading higher.
AK Steel holdings Corp is trading higher before the opening bell by 0.32 cents to $13.06. Southern Copper Corp (NYSE:SCCO) is another stock that is trading higher this morning by 0.82 cents to $31.05. When the dollar declines most commodity and inflationary stocks will rally higher and catch a bid higher. However, should the U.S. Dollar Index bounce or rally higher these stocks will simply deflate and usually sell off. Therefore, the dollar action is critical as the major stock indexes continue to trade inverse to the greenback.
Today the ADP employment report was released at 8:15 am EST and was below analysts expectations. However, when the dollar declines the stock markets inflate higher and bearish news will usually take a back seat. It is really that simple. Should the dollar reverse and trade higher this rally could falter. As for know September is starting the month very strong.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
