The market is showing positive divergences in two major areas. These areas signal stimulus and possible bank recapitalization from the European Union and the ECB. Ultimately, the markets are signaling something big on the horizon that could cause the market to pop sharply in the short run. 

By now everyone should know that when the U.S. Dollar Index is strong the major stock and commodity markets will deflate and trade lower. Most leading commodity stocks are falling sharply lower today as the U.S. Dollar Index futures surge higher. Traders can easily see how the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP) is trading higher by 0.17 cents to 22.51 a share.

Nearly every trading session when the stock market is lower the U.S. Dollar Index is higher. Well, that is certainly the case once again today. This morning, the U.S. Dollar Index futures (DX-M2) are trading higher by 0.38 cents to $79.69 per contract. While 0.38 cents does not sound like much in the U.S. Dollar Index; it can move markets.

This morning, the U.S. Dollar Index topped out around 4:30 am EST. This was the same exact time that the S&P 500 Index e-mini futures (ES-M2) bottomed out. Traders can easily see how these two indexes continue to trade inverse to each other. When the U.S. Dollar is devalued it will inflate asset prices around the world. Traders can see how the large bank stocks are surging higher today.