Ways we're playing the latest breakout, with an eye toward a weakened U.S. dollar and potential inflation, include:

• The PowerShares DB U.S. Dollar Index Bearish (NYSE: UDN). This ETF automatically shorts the greenback, which is a trade we first made on May 8. It still seems ripe to add to existing positions at this point. The ETF just broke above significant resistance of $27.01 a share on heavy volume. We've got a price target of $30 per share.

• The Energy Select Sector SPDR (NYSE: XLE). In times of rising prices, we definitely want to own hard assets. As Fed chairman Ben Bernanke has alluded to in the past, it's apparent that the U.S. government is taking a dollar-weakening stance. As the dollar weakens, the costs of hard assets on a relative basis should increase. A secondary reason we like hard assets is because emerging markets are recovering faster than developed markets. So if we're expecting rising demand from China and India, for example, then that should put additional upward pressure on raw materials and energy prices. For that reason, we also like the SPDR S&P Metals & Mining ETF (NYSE: XME).

• We still like the SPDR Gold Shares (NYSE: GLD) and the iShares Silver Trust (NYSE: SLV). We've owned these ETFs in the past and recently repurchased both in early May. Fundamentally, one of our reasons to favor GLD and SLV relates to how China and other big buyers of the U.S. dollar might do in the future. While it's unlikely they'll completely walk away, they could wind up taking a portion of their holdings and diversifying into a basket of other currencies and precious metals. Even if that amount were 10% or less, such a move would add to pricing pressures on GLD and SLV.  

From a technical perspective, GLD looks to face major resistance at around $100 per share. (It was trading at $96.21 early Tuesday.) But if the ETF can move past that point, it would signal renewed strength. We've got a price target of around $125 on GLD.

On the other hand, SLV is already facing significant resistance right now. (It was trading at $15.53 early Tuesday.) Near-term resistance appears to be around $19 per share, with bigger resistance at $20.75. Remember, that's still a 33% upside from where it's trading right now. But if SLV can break out past $21, the next resistance level would come at about $24 a share.

Again, this is a very fluid situation. Whatever you do, we suggest taking proper precautions and using stop loss orders with whatever investments you're considering. That can't be stressed enough in these volatile times. No doubt many doomsday forecasters have solid fundamental reasons to be concerned at this point. But as stock markets are now technically confirming a new growth cycle is taking shape, we're seeing opportunities. Still, we're putting safety first and not letting a nice summer rally loll us into a false sense of security.

Jerry Slusiewicz is president of Pacific Financial Planners in Newport Beach, Calif. He welcomes comments and suggestions for future columns at:  This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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