Well, it looks like the broad stock market doesn't like the idea of an interest rate hike after all - maybe. The DOW's 253 point drop today erases yesterday's gains, but directional momentum is still mixed bullish and bearish in the DOW (as well as in the S&P 500 and NASDAQ) so the markets short-term direction is still not clear. A "Santa Claus rally" into the end of the month is still not out of the question, especially if Monday's lows (17,138 in the DOW and 1993 in the S&P 500) were the start of a new medium-term cycle. If this market continues to fall, however, and breaks those lows, we could get a real washout into the holidays that could even extend into mid-January. The broad stock market may continue to oscillate a few more days before deciding on a direction so it is probably best to remain on the sidelines for now.
It looks like gold and silver also waited a day before expressing their displeasure with the rate hike (and its positive effect on the dollar). Gold dropped to $1048 intraday but significantly did not break below its Dec. 2 low of $1046. Silver also dropped close to but not below its new monthly (and yearly) low from Monday. We therefore still have a case of intermarket bullish divergence in effect (gold's low on Dec.2 and silver's low on Dec.14). We will place a tight stop loss now for our long positions on a break and close below both these lows. If this happens, we may have to wait until mid-January for the medium-term cycle bottom in both metals. Still holding my long position in gold and silver.
Not surprisingly, the U.S. dollar benefited from the Fed's rate hike, but its rally is already showing signs of weakness. The chart of the U.S. Dollar Index shows that after its recent breakdown the dollar has a lot of resistance to overcome between 98.5 and 100. Can momentum from the rate hike propel the dollar through this resistance? Maybe, but this area would also be a good spot for the dollar to turn back down, if not now then maybe at the end of this month or in mid-January. Directional momentum in the dollar is currently mixed bullish and bearish.