Yesterday the Federal Reserve Governor of St. Louis, Jim Bullard, publicly stated that a Fed interest rate cut may be warranted soon. Today Fed Chairman Jerome Powell declared that the Fed may have to respond if Trump's "trade wars" hinder the economy. This indicates that the Fed is likely responding to the current deep correction in the broad stock market that has many investors worried. An interest rate cut now would be a dovish gesture that could give a bullish boost to equities and avert a possible panic and selloff in the market. Indeed, today all three market indices (DOW, S&P 500, NASDAQ) are up nearly 2%. The Fed's dovish coos are also having an effect on the U.S. Dollar Index as it fell steeply yesterday and today (the greenback prefers hawkish rhetoric from the Fed).
As usual, we need to wait a day or two to see if the Fed's comments will have a major impact or just create a short-lived surge or dip in these markets. The DOW and S&P 500 are pushing up against resistance near their recent "breakdown" points and may be at a good spot to sell short. If the DOW and S&P don't "break out" tomorrow, and if they show signs of peaking, we may consider doing that. Stay tuned.
The U.S. dollar's recent fall has given a bullish boost to the precious metals (especially gold), but the U.S. Dollar Index is now at a strong support level and could have at least a short-term recovery bounce that would curb this rally in the metals. If we get that, it may give us a good chance to buy a short-term dip as both metals are looking very bullish now.