IN: Markets Start Higher Despite Spain, Italy, and GDP
There is a ton of stock market news this morning. Last night, Spain was downgraded by Standard & Poors to BBB+ from A with a negative outlook. Then this morning, Spain announced that unemployment climbed to 24.4. percent from 23.8 percent. Believe it or not, the IBEX 35 (Spanish stock index) is trading higher by 1.90 percent today. This is why we use charts and do not follow the news, who could imagine the Spanish stock market would be trading higher on this negative news. Earlier today, Italy sold €5.95 billion in debt as yields climbed to 5.84 percent. It seems that as long as bond yields remain below 6.0 percent the stock markets hold up. First quarter GDP (gross domestic product) for the United States was released at 8:30 am EST, the Q1 number was 2.2 percent which was well below analyst expectations of 2.5 percent. With all of this negative news you would think the markets would be lower, however, that is not the case as the stock markets are higher ahead of the opening bell.
There is really only one way to judge if the stock markets are going to be higher or lower and that is to follow the U.S. Dollar Index. All of the markets in the world are trading inverse to the U.S. Dollar Index at this time. This morning, the U.S. Dollar Index futures (DX-M2) are trading lower by 0.23 cents to $78.77 per contract. Some leading equities that are likely to be in play today include PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP), CurrencyShares Euro Trust(NYSEARCA:FXE), iShares MSCI Italy Index (ETF) (NYSEARCA:EWI), and the iShares MSCI Spain Index (ETF) (NYSEARCA:EWP).
