Normally, if the European Union would have to dilute their currency this action would cause the U.S. Dollar Index to strengthen. However, the Euro has actually gained and rallied sharply higher over the past five trading days. This goes to prove that traders should simply forget the news and follow the charts. When the U.S. Dollar Index futures (DX Z1) decline the stock markets inflate and trade higher. This is what has been driving the markets higher since the March 2009 stock market low. Every trade is essentially a trade on the U.S. Dollar.
Generally, it was commodity and energy stocks that would inflate higher when the U.S. Dollar Index declined. Now everything is trading like a commodity stock. Leading casino stocks seem to react faster to the falling U.S. Dollar Index than commodity stocks such as Freeport McMoRan Copper & Gold Inc. (NYSE:FCX). Just look at a chart of Wynn Resorts Ltd (NASDAQ:WYNN), or Las Vegas Sands Corp (NYSE:LVS) and you will see how these stocks are trading inverse to the U.S. Dollar Index. Perhaps it is because the casino stocks are making most of their money in China and a weak U.S. Dollar will help the Chinese markets. In any case, the U.S. Dollar action is dictating every move in the stock market at this time.
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