This morning the second quarter Gross Domestic Product(GDP) results were released by the Commerce Department. The second quarter Gross Domestic Product reported was 2.4%. This is sharply lower from the revised first quarter number of 3.7%. Economists had expected the second quarter number to be 2.5%. Therefore, today’s number was not a big surprise. What does this all mean for the market?

Well, today the market is starting out under pressure with the SPDR S&P 500 ETF (NYSE:SPY) trading lower by 1.06 to $109.20. Most commodity stocks are under pressure this morning and this is a sign of deflation. Leading commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), and Southern Copper Corp (NYSE:SCCO) are trading lower and remain under pressure. Remember when the U.S. Dollar Index is trading higher on the trading session this will often push the commodity stocks lower. Therefore, always keep a dollar chart open as most professional traders will key off this chart. Remember when the dollar is higher the stock market indexes will deflate. Should the dollar decline or sell off the market will inflate higher.

Since the July lows the markets have surged higher climbing about 10.0 percent from that level. However, since July 16th, the major indexes have been very choppy and volatile. This type of volatile action could be expected going forward. Please remember to keep an eye on the U.S. Dollar Index as that chart will generally give traders a good indication of where the stock indexes are trading. This morning the U.S. Dollar Index is trading higher by 0.15 cents to $81.79 and the market is obviously trading lower.

- About the Author: Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets. Article Source

By all accounts the month of July has been very positive for the major stock market indexes. The SPDR Dow Jones Industrial Average (NYSE:DIA) is now higher by more than 7.0 percent from the early July low pivot. This is a sharp advance higher in less than a thirty day period for the markets. The big question that most traders and investors are now asking is, how much upside is left in the tank?

July is an earnings reporting period for most companies; thus far the results have been mixed. In the beginning of the month the street reacted poorly to most earnings releases despite the numbers or guidance reported. Alcoa (NYSE:AA), and Intel Corp (NASDAQ:INTC) both sold off after reporting better than expected earnings. Recently the street has been reacting better to earnings and economic news. Even companies such as International Business Machines (NYSE:IBM) has bounced back after initially getting pummeled after reporting earnings. You can almost feel the mood of the market changing its mind on a daily basis. It is important to note that the Dow Jones Industrial Average has staged four major reversal days since July 16th. This is a very rare event and shows the amount of uncertainty that is still in the marketplace.

The driving force in this market is not earnings or the economic news. Nor is it the Federal Reserve Bank talking of the next remedy they have in the medicine chest. It will not be the European bank’s stress tests; it will not be any of these so called major events. It will be and has been one thing since 2008; it is the movement and action in the U.S. Dollar. When the dollar declines the markets inflate. When the dollar rallies the stocks markets around the world deflate. Personally, I believe it is that simple. Sometimes the stock markets will trade inverse to the dollar on a tick for tick basis. Other times the market will react inversely to the dollar on a daily basis. The end result is that the U.S. Dollar Index has dropped around 7.0 percent since the June high. It is rather ironic that the stock market is higher by 7.0 percent since the early July lows. It is all about the U.S. Dollar Index. The bottom line is when the dollar falls the stock market inflates.

Nicholas SantiagoChief Market Strategistwww.InTheMoneyStocks.com

- About the Author: Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets. Article Source