DOLLAR BEARISH ETF SURGES ON BIG VOLUME OIL BREAKS TRIANGLE RESISTANCE AGRICULTURE ETF BREAKS CHANNEL RESISTANCE NATURAL GAS ETF GETS OVERSOLD BOUNCE SILVER ETF BREAKS WEDGE RESISTANCE BASE METALS ETF CHALLENGES RESISTANCE

DOLLAR CONTINUES TO FALL... In a continuation from yesterday's breakdown, the US Dollar Bullish ETF (UUP) extended its fall in early trading on Thursday. Chart 1 shows the ETF down over 1% with move below 25. The bottom indicator window shows UUP with the S&P 500 ETF (SPY). Notice that SPY weakened as UUP moved higher in January-February. Now that the Dollar is weakening, SPY is finding strength with a rather sharp upturn over the last two weeks. It appears that stocks prefer a weak Dollar. Chart 2 shows a chart that looks like the Euro, but it is actually the US Dollar Bearish ETF (UDN). This inverse ETF found support around 24 from the Nov-Dec lows and surged back above its 50-day moving average this week. Notice that volume also surged as the ETF traded over 1 million shares the last two days.

Chart 1

Chart 2

PLUNGING DOLLAR LIFTS OIL... Oil futures moved above $50 in early trading on Thursday. Weakness in the Dollar and hope for the Fed plan buoyed demand for this key commodity. Chart 3 shows West Texas Intermediate Crude ($WTIC) breaking triangle resistance over the last two weeks. Oil formed a base of sorts as it consolidated from December to February. The March breakout is bullish and points to further strength over the coming weeks, perhaps even months. There are three target methodologies shown on the chart. First, a dotted blue line was drawn parallel to the lower triangle trendline and extended into April. Second, the height of the triangle was added to the breakout (green dotted lines). Third, the red dotted line estimates the falling 200-day over the next few weeks. All roads point to the mid 60s. Should the stock market continue to rise and the Dollar continue to fall, oil could very well reach these targets.

Chart 3

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DOLLAR AND FED LIFT OTHER COMMODITY GROUPS... Strength in commodities was not confined to oil and gold. In addition to the falling Dollar, other commodities are strengthening on hope that the Fed plan will simulate the economy. This is also the reason the stock market is rising. A rising stock market (economy) and falling Dollar provide a double punch for commodities. With 2008 being a brutal year, many of these commodities are ripe for bounces. Chart 5 shows the Natural Gas ETF (UNG) surging over 8% in early trading on Thursday. Even with this big gain, the ETF remains in a clear downtrend and below hits 50-day moving average.

Chart 5

Chart 6 shows the Agriculture PowerShares ETF (DBA) breaking above channel resistance and the 50-day average over the last few days.

Chart 6

Chart 7 shows the Base Metals PowerShares ETF (DBB) surging in early March and consolidating just below its resistance line. A breakout in this ETF would be positive for the Materials SPDR (XLB).

Chart 7

Chart 8 shows the Silver ETF (SLV) finding support from convergence of the 50-day and 200-day moving averages. The ETF formed a falling wedge correction and broke resistance with a gap up today. Notice that silver held up much better than the other commodity ETFs. Although silver is more of an industrial metal than a precious metal, strength in gold probably helped silver over the last few months.

Chart 8