Follow The Money

Today the S&P 500 Index and the rest of the major stock market indexes are all trading sharply higher to start the trading session. The initial jobless claims were better than expected this morning coming in at 407,000. However, during the holiday season the initial jobless claims should decline so I'm not really sure this is a very good number. The main reason for today's move higher in the stock market is simply because of the declining U.S. Dollar Index. When the U.S. Dollar Index declines the major stock market indexes will inflate and trade higher. This can easily be seen in all of the commodity stocks. Today Cliffs Natural Resources Inc.CLF, Southern Copper Corp.SCCO, and United States Steel Corp.X are all trading sharply higher this morning. It is also important to note that this Friday is the start of the Christmas shopping season or better known as 'black Friday'. This is the time of year when many retailers will get out of the red and enter the black on their balance sheet. In other words this is when these companies will finally make a profit. When you consider all that the government and the Federal Reserve have done in order to keep the stock market inflated there is very little chance they would let the stock markets sell off ahead of a major holiday when people are going to spend money. It is important to remember that U.S. consumer spending accounts for 70 percent of the gross domestic product(GDP) in the United States. Therefore, if this quantitative easing that is being done by the Federal Reserve bank is going to work for a while it will require the U.S. consumer to spend money and lots of it. Traders and investors should keep one eye on the U.S. Dollar Index. Should the U.S. Dollar Index rally or catch a bid higher the stock markets will deflate and trade lower. However, as long as the U.S. Dollar Index trades lower on the session the major stock market indexes will likely hold up today.