Today the U.S. Dollar Index has rallied back into positive territory after starting the morning sharply lower. Normally when the U.S. Dollar Index rallies the major stock market indexes will deflate and trade lower. However, today the major stock market averages have been able to still hold some of it’s early morning gains. This strong stock market action is likely do to the very light volume and the agreement between the tax and unemployment agreement between the President and the Republican party.
There where several asset classes that are feeling the effect of the stronger U.S. Dollar Index today. Gold, silver, and oil are all pulling back today. The popular SPDR Gold Shares(NYSE:GLD) is trading lower by $1.52 to $137.59. The pullback in the GLD comes after the popular ETF made a new high this morning. The same type of trading action took place in the iShares Silver Trust(NYSE:SLV). This morning the SLV made a new 52 week high at $30.00 and has sold off since that time. Spot crude also made a new high for the year this morning trading as high as $90.76 a barrel before pulling back. Spot crude closed lower on the session by 0.69 cents to $88.69 a barrel.
Many extended commodity stocks such as United States Steel Corp.(NYSE:X), and Cliffs Natural Resources Inc.(NYSE:CLF) also pulled back from their intra-day highs. Gold and silver mining stocks also sold off today from an extended move on the daily charts. The popular Market Vectors Gold Miners ETF(NYSE:GDX) is trading lower by $1.04 to $62.74. At this time all of these pullbacks looks to nothing more than short term corrections.
The new tax cut and unemployment agreement between the President and the Republican party should only have a short term positive effect. After all this agreement could add another $1-5 trillion to the U.S. deficit. This market is all about the short term gain and never looks at the long term pain which will certainly come again.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
