Dollar Drops As Commodities Surge

Oil is enjoying its best rise in over a month today, with crude prices spiking nearly $6 to $121.50. Yesterday I commented that oil looked like it was trying to bottom, and could work higher, but I didn't expect it to come in one day. The question is how long this bounce can last though.

The dollar is weaker this morning, and that is helping all of the commodities bounce. The CRB Index is up more than +2%, gold is up +3%, as well as the grains (DBA), steel, copper, etc.

Outside of rising energy stocks, not much else is working. Financials and brokers are lower after Citi lowered its earnings estimates on all of the brokers. And consumer stocks are lower on the rise in energy prices.

There was also some weaker economic news. The leading economic indicators for July fell -0.7% (vs. -0.2% consensus). And the 4-week moving average of jobless claims rose to 445,750. I should point out that while that figure is elevated, it is still below the normal levels that we see during recessions.

Asian markets were lower across the board overnight. The 10-year yield is up to 3.84%, which is right at resistance at its downsloping 200-day average.

The put/call ratios have been high all week, so we will probably get a bounce at some point. But technically, the indexes looked like they have rolled over from their July rallies and the outlook remains clouded.