As expected, the Fed left interest rates unchanged at the end of today's FOMC meeting. The Fed's statement, released at 2 PM, also showed no indication that a rate change would be coming at the next meeting in March. Equity markets dropped a bit after the release of this statement, but then they recovered during the subsequent press conference by Fed Chairman Jerome Powell. Because there were no major surprises or dramatic rhetoric from this Fed meeting, it may not have much impact on the current direction of markets. We will therefore rely mainly on our technical and cycle analysis for clues on where the markets are going.
Today the DOW made a "double-top" near its all-time high (although it did not exceed it) inside our strong reversal zone (Jan. 22 - 30) which ends on Thursday. The S&P 500 and NASDAQ also made double-tops last Friday before "gapping" down dramatically on Monday. Both indices have rallied back up from Monday's lows, but they still haven't closed those gaps. The S&P 500 is the only index that made a new all-time high this month (last Friday), so we continue to have a strong bearish divergence signal between these indices. This is a strong bearish picture. Unless all three indices can break out to new all-time highs next week, it looks more like another significant correction may be in the cards. We'll remain on the sidelines of the broad stock market for now.
The Fed meeting did not seem to affect the precious metals market. Gold and silver prices have been relatively flat this week. Gold likely made a significant high last Friday at $2785 inside our general reversal zone as well as a reversal zone specifically for the precious metals (Jan.22 - 30). Unless gold can make a higher high next week, it should be falling lower from here (or from a new high tomorrow). We are still looking for a possible buy spot on any significant correction that holds above $2586. Silver prices seem congested between $30 and $31 which makes it difficult to label the current medium-term cycle. A break above or below these levels will help clarify this picture. We are currently on the sidelines of both metals.
Crude oil prices were also not affected much by today's Fed meeting. We are two days into a reversal zone specifically for crude (Jan. 28 - Feb. 6), and prices seem to be holding above a support line around $72 (March contract chart) in between the 15-day and 45-day moving averages. A sharp turn back up could be imminent. I am still holding my long position in this market for now. There should also be support near the 45-day moving average (now at $71.50) and after that at $70. Any of these support areas could be used as stop loss points for long positions.