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DOLLAR'S RISE CRUSHING COMMODITIES

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The U.S. dollar couldn't move lower forever. It had to turn and when it did, we knew things might get ugly for commodities. Since the July 14th low in the dollar index, we've seen the greenback rise over 10% (see Chart 1). That has sent commodity prices reeling. Crude oil prices per barrel have tumbled nearly 30% (Chart 2). Silver is down approximately 37%. Copper is down close to 25%. Gold has fallen about 19%. Commodity-related stocks have been bludgeoned as institutions have been liquidating stocks that the bears simply couldn't touch just a couple of months ago.

Volatility provides opportunities, especially as options expiration approaches. Take a quick look at the VIX, which broke out of a downtrend early last week.

We will be watching the action very closely as we finish next week and then head into another options expiration week. Analysis of max pain generally serves us well. If you're interested in learning more about max pain and how options expiration can affect the stocks you trade, then go to www.investedcentral.com/maxpain.html for more details about an upcoming LIVE presentation. Best of all, it's FREE!

Happy trading!

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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