COMMENT ON THE FOMC MEETING and BRIEF MARKETS UPDATE (5:00 pm EDT)
The FOMC concluded its meeting today at 2 pm (EDT) and announced another quarter point interest rate hike as expected. In a post-meeting statement, the Fed seemed to soften its rhetoric on future rate hiking, but Fed Chairman Jerome Powell took a more hawkish tone in his 2:30 press conference saying it will take more time for inflation to come down and that it would not be appropriate to cut rates at this time. The broad stock market was stable until Powell began his press conference, and it finally plunged to a steep loss by the time of the closing bell at 4 pm.
It's a little too early to tell if Powell's hawkish statements will trigger a major sell-off or if today's drop is just a "flash in the pan". Today the DOW was down 270 points and testing support around 33,500, but it is still above the 45-day moving average and above last week's low. The S&P 500 and NASDAQ are also still between their 15-day and 45-day moving averages and well above last week's lows. I am still holding my long position in this market for now with the stop loss points indicated in yesterday's blog (33,000 for the DOW, 4,050 for the S&P 500, and 11,800 for the NASDAQ).
Apparently Powell's hawkish statements did not impress the U.S. Dollar Index (as they usually do), and the greenback fell sharply. This had the effect of lifting the precious metals a bit, which was good for our current long position in gold (which we are holding for now).
The biggest loser today was crude oil which dropped another $3 to $68.25 (May contract chart) and closed below the "round number" support at $70. This is not boding well for crude. If crude breaks below the $64.58 low of March 20 (the start of the current medium-term cycle), it will mean that either the cycle is turning bearish or we may have to relabel the cycle as an older one. We are staying on the sidelines of crude until this ambiguity can be resolved.
The FOMC concluded its meeting today at 2 pm (EDT) and announced another quarter point interest rate hike as expected. In a post-meeting statement, the Fed seemed to soften its rhetoric on future rate hiking, but Fed Chairman Jerome Powell took a more hawkish tone in his 2:30 press conference saying it will take more time for inflation to come down and that it would not be appropriate to cut rates at this time. The broad stock market was stable until Powell began his press conference, and it finally plunged to a steep loss by the time of the closing bell at 4 pm.
It's a little too early to tell if Powell's hawkish statements will trigger a major sell-off or if today's drop is just a "flash in the pan". Today the DOW was down 270 points and testing support around 33,500, but it is still above the 45-day moving average and above last week's low. The S&P 500 and NASDAQ are also still between their 15-day and 45-day moving averages and well above last week's lows. I am still holding my long position in this market for now with the stop loss points indicated in yesterday's blog (33,000 for the DOW, 4,050 for the S&P 500, and 11,800 for the NASDAQ).
Apparently Powell's hawkish statements did not impress the U.S. Dollar Index (as they usually do), and the greenback fell sharply. This had the effect of lifting the precious metals a bit, which was good for our current long position in gold (which we are holding for now).
The biggest loser today was crude oil which dropped another $3 to $68.25 (May contract chart) and closed below the "round number" support at $70. This is not boding well for crude. If crude breaks below the $64.58 low of March 20 (the start of the current medium-term cycle), it will mean that either the cycle is turning bearish or we may have to relabel the cycle as an older one. We are staying on the sidelines of crude until this ambiguity can be resolved.
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