Like a broken record, U.S. stocks enjoyed a nice Monday rally, as did many commodities, as the Dollar traded at its lowest level since August 2008. The Yen was the largest benefactor of the Dollar decline today, as the carry trade continues. The Dollar also fell against the Euro and British Pound.

Also benefiting from the Dollar decline was Gold, Silver, Crude Oil, and Copper, among other markets. Interestingly, in spite of a big rise in commodity prices and stocks, the 10 Year Treasury Note also rallied sharply, lower yields to their lowest levels since early October.

The question is, how long can we have a declining Dollar, low interest rates, a fast rising stock market, and higher commodity prices before something gives? I suspect we continue to see these trends through the end of the year. However, when the trend following commodity traders and hedge fund managers decide to head for the exits, they all tend to do so at the same time. You can definitely expect very sharp corrections to occur when that happens.

I suggest that the trends continue through the end of the year since fund managers will want to show strong yearly performance results to show their investors. Once that occurs, they will have no problem liquidating positions at the first sign of any kind of trouble for the markets. or when it becomes obvious that central banks have started to hit the liquidity breaks.

Stay tuned!

Scott Cole www.bestdaytradingstocks.com