COMMODITIES WILT WITH DOLLAR REBOUND…

WOW…What a week!!! Let’s see if I can recap this past week by posting a few headlines.

• Monday…up 50 points

• Tuesday…up 416 points. HOMEBUILDERS, RETAILERS, AND TRANSPORTS CONTINUE TO SHOW NEW MARKET LEADERSHIP — BANK BOUNCE ALSO HINTS THAT FINANCIAL SELLOFF IS OVERDONE — A LOT OF SHORT-TERM POSITIVE DIVERGENCES ARE SHOWING UP, SUGGESTING A POSSIBLE MARKET BOTTOM
• Wednesday…down 280 points ENERGY AND MATERIALS SECTORS LEAD THE WAY LOWER – COMMODITIES TUMBLE AS DOLLAR REBOUNDS – THE DOW AND SHORT-TERM INTEREST RATES – NEW LOWS STILL OUTPACING NEW HIGHS
• Thursday…up 261 points FANNIE MAE AND FREDDIE MAC LEAD FINANCIAL RALLY — HOMEBUILDERS AND REIT RALLY SUGGEST IMPROVEMENT IN HOUSING — WAL MART LEADS RETAIL HOLDERS HIGHER — CSX IS TRANSPORTATION LEADER — GENERAL ELECTRIC SHOWS NEW LEADERSHIP
• GOOD FRIDAY

The U.S. dollar rebounded over the last two days. Even though the bigger trend remains down for the U.S. Dollar Index ($USD), it was ripe for a bounce after becoming severely oversold…COMMODITIES WILT WITH DOLLAR REBOUND… Even though the rebound in the U.S. dollar is just a couple days old, the commodity-related ETFs took big hits over the last few days. An oversold bounce in the dollar triggered profit-taking in overbought commodities.

The chart below show an interesting relationship between Gold and the U.S. Dollar. It will be interesting to see if Gold has topped, or will it make a retracement and continue in its upward trend.