DOLLAR INDEX IS WEAKENING -- THAT MAY BE HELPING COMMODITIES -- THE BLOOMBERG COMMODITY INDEX IS BOUNCING OFF ITS 50-DAY AVERAGE -- CRUDE OIL TOUCHES TWO-YEAR HIGH -- ENERGY SPDR IS BOUNCING OFF CHART SUPPORT -- SO ARE TRANSPORTS AND FINANCIALS

DOLLAR INDEX THREATENS ITS 50-DAY AVERAGE... The U.S. dollar is in retreat today against most major foreign currencies. Chart 1 shows the PowerShares Dollar Index Fund (UUP) threatening to drop below its 50-day moving average (blue line). That would be the first time the UUP has slipped below that support line in two months. Not surprisingly, most foreign currencies are rising. Chart 2 shows the British pound trading back above its 50-day line. Chart 3 shows the euro doing the same. While Chart 4 shows the Japanese yen bouncing off chart support at its July low. The yen is trying to climb back above its 200-day line. Commodity prices may be getting some help from a falling dollar today. Crude oil is trading at a two-year high.

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Chart 1

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Chart 2

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Chart 3

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Chart 4

BLOOMBERG COMMODITY INDEX STILL IN UPTREND... Chart 5 shows the Bloomberg Commodity Index ($BCOM) in an uptrend that started at midyear. The commodity index is bouncing off its 50-day average today (blue arrow). Most commodities are in the plus column. That's especially true of energy prices. Chart 6 shows the United States Oil Fund (USO) reaching the highest level since February. Its 50-day average recently crossed over its 200-day line, which is a bullish sign (green circle). The same is true for the Bloomberg Commodity Index. WTIC crude oil is trading at the highest level in two years. That's helping energy shares.

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Chart 5

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Chart 6

ENERGY SPDR TRYING TO RALLY ... Chart 7 shows the Energy Sector SPDR (XLE) trying to bounce off potential support along its 200-day average (red line) and a horizontal support line drawn over its July peak and under its late October low (green line). That's a logical spot for the XLE to attempt a rebound. The red horizontal line shows that the August/November price advance for the XLE stalled near the previous peak formed during the first half of April. That marks an important resistance line. The shape of the chart suggests that the XLE is in a pullback within the confines of an emerging uptrend. But it needs to stay above the green line to maintain that uptrend. The fact that crude oil prices are rising should tilt the odds to the upside.

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Chart 7

THE TRANSPORTS ARE ALSO BOUNCING OFF SUPPORT ... Transportation stocks are also starting to rebound a bit. They've been one of the market's weakest groups over the past month. Chart 8 shows the Dow Jones Transportation Average ($TRAN) trying to rebound off a horizontal support line drawn over its mid-August peak. Its also starting to find support near its 200-day average (red arrow). A weak transportation group isn't a good sign, especially with the Dow Industrials hitting new records. This would be a logical spot for the transports to start moving higher.

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Chart 8

FINANCIALS ARE FINDING SUPPORT NEAR 50-DAY LINE ... Financials have also been market laggards over the last month. Chart 9, however, shows the Financial Sector SPDR (XLF) starting to bounce off its 50-day moving average. It may need some help from higher bond yields. Add financials to the list of stock groups that are trying to regain their uptrends.

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Chart 9

ASIAN EMERGING MARKETS ARE LEADING WORLD HIGHER... The monthly bars in Chart 10 show Emerging Markets iShares (EEM) having broken out to a new record. This year marks the first time since 2010 that emerging markets are rising faster than developed markets. The EEM has gained 37% this year (in dollar terms) versus a 22% gain in foreign developed markets (EAFE) and a 16% gain in the S&P 500. The EEM is being led higher by emerging Asian markets in China (Hong Kong), South Korea, and Taiwan. Those three Asian markets account for more than half of the EEM (56%). And all three of their stock ETFs have hit new records. The main driving force behind that rally has been the region's heavy weighting in technology shares. Tencent Holdings (Hong Kong), Samsung Electronics (South Korea), and Taiwan Semiconductor are three of the biggest and strongest stocks in the EEM. Even though the U.S. is lagging behind foreign stocks this year, the fact that foreign developed and emerging stock ETFs are hitting record highs is a positive sign for everyone. And something to be thankful for.

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Chart 10

HAPPY THANKSGIVING ...