The dollar is finally enjoying some time trading higher…but what makes it so interesting is that for once it’s Bernanke who’s helping it higher.

Bernanke hinted at a second half of the year recovery and mentioned that the weakened dollar has increased the price of imports.  Now ofcourse I am using my own words, but that’s the meat of what he said.  This in effect is the first of three steps to a dollar recovery…first is taking future rate cuts off the table.  Stock bulls don’t like the sound of that as most stock traders think the whole world revolves around nothing but equities…well all that complaining and whining for lower interest rates has helped crude oil higher…hmm, do people not understand "cause and effect"?  Apparently not.  Ofcourse speculation and demand has helped crude higher as well (less of the former and more of the latter).

The Dow has been reversing the pre-market rally and down triple digits now…the sell-off has suspiciously accelerated on the lunch time doldrums and that alone will lead me to look at the close and see if this sell-off doesn’t recover some after the bonds close.

I think what no one is mentioning is the fact that the rate cuts are off the table for now and the stock market is selling off for the same reasons the dollar is buoyed up above 73.00.  Maybe a simplistic view but certainly part of what is being baked into the cake. 

I’ll be watching the 73.20 and 73.00 levels for a "base and bounce" if the Bernanke dollar rally is for real…

- Raghee