COMMENT ON THE FED MEETING and BRIEF MARKETS UPDATE (5:00 pm EDST)
Today the Fed announced another one-quarter point hike in key interest rates (which was expected by most analysts, investors, and traders), but the Fed statement as well as Chairman Jerome Powell's comments in a subsequent press conference suggested there might be only one more rate hike this year. Equity markets were stable up to the Fed announcement at 2pm, they rallied a bit just after the announcement, but then started to fall steeply during Powell's press conference as he acknowledged the current banking crisis and warned that inflation is still not under control.
Did the markets dislike Powell's final words, or are we seeing a case of "buy the rumor" (the market rallying this week on expectations of the Fed softening rate hikes), then "sell the news" (confirmation of fewer hikes today with the market having already factored in the rally)? It's hard to say, but if today's sell-off continues into Friday, we could see at least the DOW make a new low at the end of our current strong reversal zone, and a good spot to go long. We are currently on the sidelines of the broad stock market.
The Fed's slightly dovish curbing of rate hikes may have pushed the U.S. Dollar Index lower, and this in turn boosted gold and silver prices. But the greenback is approaching a strong support line at 102. It could reverse back up from there and push the metals back down. Gold prices are still below Monday's high of $2007, so we will maintain our short position in that metal for now. We are still on the sidelines of silver.
Crude oil prices pulled back with the broad stock market today after the Fed's rate hike announcement. Crude may be encountering some resistance in the $70 - $72 range (May contract chart). As I stated in yesterday's blog, I would like to see crude move lower into April for a final medium-term cycle bottom (and a good buy spot), but if the current rally picks up momentum and starts closing above $75, we may have to abandon that idea. We are still on the sidelines of crude.
Today the Fed announced another one-quarter point hike in key interest rates (which was expected by most analysts, investors, and traders), but the Fed statement as well as Chairman Jerome Powell's comments in a subsequent press conference suggested there might be only one more rate hike this year. Equity markets were stable up to the Fed announcement at 2pm, they rallied a bit just after the announcement, but then started to fall steeply during Powell's press conference as he acknowledged the current banking crisis and warned that inflation is still not under control.
Did the markets dislike Powell's final words, or are we seeing a case of "buy the rumor" (the market rallying this week on expectations of the Fed softening rate hikes), then "sell the news" (confirmation of fewer hikes today with the market having already factored in the rally)? It's hard to say, but if today's sell-off continues into Friday, we could see at least the DOW make a new low at the end of our current strong reversal zone, and a good spot to go long. We are currently on the sidelines of the broad stock market.
The Fed's slightly dovish curbing of rate hikes may have pushed the U.S. Dollar Index lower, and this in turn boosted gold and silver prices. But the greenback is approaching a strong support line at 102. It could reverse back up from there and push the metals back down. Gold prices are still below Monday's high of $2007, so we will maintain our short position in that metal for now. We are still on the sidelines of silver.
Crude oil prices pulled back with the broad stock market today after the Fed's rate hike announcement. Crude may be encountering some resistance in the $70 - $72 range (May contract chart). As I stated in yesterday's blog, I would like to see crude move lower into April for a final medium-term cycle bottom (and a good buy spot), but if the current rally picks up momentum and starts closing above $75, we may have to abandon that idea. We are still on the sidelines of crude.
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