BRIEF MARKETS UPDATE (5:30 pm EST)
The Federal Reserve ends its two-day April meeting tomorrow (Wednesday) and will release a statement in the afternoon that most analysts feel will not rock the boat of the policy and tone established at last month's meeting.
That would mean continuing the QE taper (i.e. another $10 billion reduction in monthly bond purchases) and, most importantly, a reiteration of the Fed's position that interest rates remain near zero for the foreseeable future. The Fed is very much aware of how sensitive markets are right now to any suggestion of raising short-term interest rates, so they will likely be dovish in their language on this topic for most of this year. As we know from the past, Federal Reserve statements can produce significant reactions in all markets, especially indecisive ones like we have now, so we will be carefully watching the directions of markets tomorrow afternoon.
The broad stock market has rallied back up to the point where we sold it short last Thursday so we are in our stop-loss area. If the Fed's statement has a bullish effect on equities we may have to bail out of this short position. However, the DOW and S&P 500 still have not exceeded their highs from last week, let alone their all-time April 4 highs, and NASDAQ charts remain strongly bearish. This market, therefore, still has the potential to turn down. Maintaining that short position for now.
Some short-term signals in gold and silver charts are turning bearish today. The precious metals really look like they want to go lower short-term, but a strong reaction to the Fed's statement tomorrow could possibly kick-start a strong rally, especially if gold can break above the $1330 area and close above there for the week. We will have to wait and see how this plays out over the next few days. Still on the sidelines here.
The Federal Reserve ends its two-day April meeting tomorrow (Wednesday) and will release a statement in the afternoon that most analysts feel will not rock the boat of the policy and tone established at last month's meeting.
That would mean continuing the QE taper (i.e. another $10 billion reduction in monthly bond purchases) and, most importantly, a reiteration of the Fed's position that interest rates remain near zero for the foreseeable future. The Fed is very much aware of how sensitive markets are right now to any suggestion of raising short-term interest rates, so they will likely be dovish in their language on this topic for most of this year. As we know from the past, Federal Reserve statements can produce significant reactions in all markets, especially indecisive ones like we have now, so we will be carefully watching the directions of markets tomorrow afternoon.
The broad stock market has rallied back up to the point where we sold it short last Thursday so we are in our stop-loss area. If the Fed's statement has a bullish effect on equities we may have to bail out of this short position. However, the DOW and S&P 500 still have not exceeded their highs from last week, let alone their all-time April 4 highs, and NASDAQ charts remain strongly bearish. This market, therefore, still has the potential to turn down. Maintaining that short position for now.
Some short-term signals in gold and silver charts are turning bearish today. The precious metals really look like they want to go lower short-term, but a strong reaction to the Fed's statement tomorrow could possibly kick-start a strong rally, especially if gold can break above the $1330 area and close above there for the week. We will have to wait and see how this plays out over the next few days. Still on the sidelines here.
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