COMMODITY-RELATED STOCKS GET MARKET OFF TO A STRONG START-- A WEAKER DOLLAR BOOSTS COMMODITIES AS OIL BOUNCES OFF LONG-TERM SUPPORT AT $40 -- FINANCIALS AND CONSUMER DISCRETIONARY STOCKS SHOW NEW LEADERSHIP -- STOCK INDEXES RALLY TOWARD 50-DAY LINES

DOLLAR DROPS TOWARD NOVEMBER LOW ... A strong bounce in foreign currencies, and a drop in the U.S. Dollar, is giving a nice boost to commodity markets and stocks tied to them. Basic material, gold, and energy stocks are helping lead the stock market higher. So are consumer discretionary and financial stocks. With stocks rising, Treasury bonds and the dollar are experiencing profit-taking. Chart 1 shows the PowerShares DB US Dollar Index Bullish ETF (UUP) falling -1.5% today and heading down to test its November lows and its 50-day moving average. The daily RSI and MACD lines have been weakening as well. A rally in foreign currencies is giving a lift to global stocks which are jumping sharply as well. Crude oil is up $3.00 (7%) and is bouncing off long-term chart support at $40. Gold is gaining $21. The CRB Index is up 9 points. Given the recent close correlation between stocks and commodities, it's encouraging to see both asset classes bouncing together.

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MAJOR STOCK INDEXES HEAD TOWARD 50-DAY AVERAGES... The major stock indexes are showing gains in excess of 3% at midday and are climbing above last week's highs. The Dow is touching its 50-day average. The S&P 500 and Nasdaq appear headed for a test of their 50-day lines as well. Daily MACD lines remain positive. The 14-day RSI lines are testing resistance at their 50 levels.

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CONSUMER DISCRETIONARY AND FINANCIALS LEAD... It's also encouraging to see some upside leadership coming from financial and consumer discretionary stocks for a change. Chart 5 shows the XLF rallying more than 4%. Chart 6 shows the XLY flirting with its 50-day average. Its relative strength line has risen to the highest level in two months. Isn't it interesting that today's burst of optimism is occurring in the face of bleak economic news. The fact that stocks scored an upside reversal day on Friday in the face of the weakest employment numbers in three decades is a sign of a sold out market. That's why you can't trade off economic numbers.

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