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The markets continues to be strong on the back of Alcoa (AA) earnings, Jobless Claims numbers (reported at 8:30am ET) and of course, the weak dollar. The combination of these three factors are giving the market a solid upside move. The biggest catalyst by far continues to be the dollar as it is hitting new lows and each tick in the dollar can be seen with an inverse tick in the markets. Truly amazing. The weak dollar policy of the government and Federal Reserve continues to help keep the markets afloat. This is what is called a reinflation rally as they crush the dollar to get commodities higher. In doing so, the major stocks that flood the indexes get a boost thus pumping the markets higher. It is a beautiful thing in the near term. However, the scary thing is that the value of the dollar has dropped 29% in the last few years alone. That means that each persons buying power has dropped by that amount as well. Forgot the 50% drop in the markest from 2007 until March 2009 lows, add a 29% reduction in buying power on to that! Crazy stuff. Anyways, some key stocks to watch are Goldman Sachs which is very weak and could be a leading indicator. In addition, AAPL continues to be weak as it was yesterday. That stock is also known as a leading indicator. Follow the dollar the rest of the day, it will tell you where this market is going.

the markets and the dollar are inversely correlated at the moment. If we break 10000 on the DOW, the drop in the dollar will continue. If we cant breach this resistance level...I think we found bottom.

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