Wednesday March 22, 2023 : F.O.M.C
Note: I accidentally released my Premium Report for today into this public area last night, so an alert email was sent out to those signed up for the Public Reports. When I noticed the mistake, I reposted into the premium area, and I then received emails asking me to allow this report back into the public space, so I am doing that now. It has been a year since I posted in this area, so maybe it is time to start posting here more often? 🙂 Thanks for the emails, I appreciate the feedback.
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Today is the big March Fed Meeting. As you know, Goldman Sachs made the claim that the Fed just couldn’t raise rates in March with 2 Banks failing over a week ago (& possibly others in a weakened state). The latest that I am hearing however, from other sources is that the Fed could raise rates by 1/4 pt. What happens if he does? What happens if he doesn’t? Either way I expect volatility, a Knee jerk reaction in one direction and then possibly a few false moves while the Fed Speaks after 2:30 p.m. Patience is needed on days like this, and you now have until 2 p.m. ET to decide how heavily you do or do not want to be positioned.
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THE SPX formed a swing low last week and moved higher both Monday and Tuesday of this week. We have hit resistance as we arrive at the FOMC Meeting, and Wednesday will be day 7. This could form as L.T. and roll over or it may just continue higher over time, since it is not overbought. Honestly, at this point in time there is no way to know for sure with the current Fed & banking situation, so use stops and Stay Frosty.
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The NASDAQ has actually been a little healthier looking on this run. On day 6 it is already above major moving averages, has a MACD & RSI Cross, and also broke above the downtrend. This actually looks quite bullish and it would probably take a Fed disappointment or strong USD reversal to hinder the progress.
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WTIC – Oil could bottom here with a dcl and possibly an ICL. A dcl would just roll over after several days, an ICL could recover and push higher like that Green arrow. You can buy these set ups with a stop ( UCO, USO), and the Fed decisions usually do not affect Oil much, but it still may be best to wait for a day or keep positions small.
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THE XOP broke down and now it too has formed a swing low, but this one closed above the 10sma. This looks like an “Island Bottom’ similar to the one in September. This can also be bought but the same discussion that we had with Oil applies here: It has been Extremely choppy and sideways for months and it might bounce short term for a week or so and roll over, or it could recover if we have an ICL.
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UNG – I was watching NATGAS (UNG, BOIL) as it dropped back to the lows, but it reversed slightly above the prior low, so I posted this in the live commenting area midday. It can be bought with a really tight stop and then just hope that it doesn’t do a quick undercut and run away (it did that in February). So…
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NATGAS has…
1. The Higher low & reversal as of Tuesday
2. A strong MACD divergence
3. An oversold condition
4. A possible ICL in February following that straight down multi week / multi month sell off and now a double bottom dcl to start daily cycle #2. I do like this set up.
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BOIL trades as a leverage for NATGAS.
I don’t like to recommend ‘BOIL” because it is a very fast, can be dangerous, and is often a very volatile leveraged vehicle, so I won’t recommend it. That said, the last time it bottomed it ran up almost 100% in 8 days. You could use a hard stop at the lows of that bullish engulfing. You could keep the position small and not try to go in very heavy and get a big loss on a down day, but that is All up to you 🙂 , because I am not recommending it as a safe easy trade here.
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This set up seems bad on a Fed day, because it could reverse and rally higher post-fed into a 2nd daily cycle. What would that do to Gold? Likely exactly what I have been saying I think we could see. A rally in the USD for the 2nd daily cycle and Gold drops into an ICL.
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So let’s discuss this Set up: We see that The USD rallied to a day 19 peak and rolled over to start its drop into a dcl. That dcl can come at any time, since we are on day 26. With the Fed tomorrow, he could trigger it. The good news is that it IS possible for the USD to do what Natgas just did too. If the Fed decision drops the USD, it can continue to slowly sell off to a double bottom low and that would allow Gold to rally post Fed.
USD – It is hard to think that the USD peaked at this point, but a continuation of the sell off that started in September is a possibility with the Banking situation and Fed manipulation. I had been saying all through January and February that I thought the USD would bounce with 2 daily cycles and cause Gold to sell off into a late March early April ICL though, and that does still line up as a possibility. Let’s see what happens with the FOMC MTG, SPEECH, and REACTION on Wednesday.
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GOLD rallied very strongly with the Banking Failures and looked like it would never pull back, right? I heard people saying that they wished for a Gold pullback. Well, On Tuesday Gold dropped $41. Anything can happen, it can pull back even more if the USD rallies.
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That is why I showed this chart on March 16:
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I have been pointing out that in July we also saw a very strong rally for 14 days, but then Gold rolled over and sold off into an ICL. That shows us that even after a very strong rally in Gold, Anything can happen and it can roll over. Today is an important Fed Decision with those bank failures fresh in mind.
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SILVER did not drop as much as Gold did on Tuesday, it pulled back less than 1%. I have been discussing for a while that at 6 months from the last ICL, it is possible that Silver has an ICL. See the chart.
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GDX -I tend to just use Golds cycle count, because Miners can extend and stretch or exaggerate the moves.
So the first daily cycle was a little short, the second one was perfect, but that 3rd daily cycle is very unusual. It feels like a 3 and a 4 really. It did make me wonder if we had a day 32 dcl at the 50sma. That would have had to have peaked quicky and fell into a 4th one, giving us an ICL here. Or was this really a 54 day 3rd daily cycle(?), almost twice as long as it should be? At this point, I’ll Just follow Gold & Silver for clues.
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Today is the big March Fed Meeting and it comes with complications. I think that the decision will be a knee jerk reaction, but I think that WHAT THE FED SAYS IN HIS 2:30 SPEECH IS WHAT IS REALLY IMPORTANT. As you know, Goldman Sachs made the claim that the Fed just couldn’t raise rates in March with 2 Banks failing over a week ago (& possibly others in a weakened state). The latest that I am hearing from other sources is that the Fed could raise rates by 1/4 pt. I expect volatility, a Knee jerk reaction in one direction and then possibly a few false moves while the Fed Speaks after 2:30 p.m. Will he discuss the Banks? Will he insist that the need to fight inflation and get it back down to 2% means rates must be hiked anyway? What else might he say? Patience is needed on days like this, and you have until 2 p.m. ET to decide how heavily you do or do not want to be positioned. Enjoy your Wednesday rollercoaster ride.
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~ALEX
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BITCOIN CHARTS BELOW:
I’ve been discussing the bullish Cryptostocks lately, and they do move quickly, so we look to buy the dips. The question is, how far will they dip?
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MARA broke out on Friday and dipped on Monday. Was that just a back test? Mara could just dip to this area or maybe down lower to the 50sma, but this looks like a nice correction after that sharp $3 to $9 rally. Also, Bitcoin is a longer term bullish set up, but with these moves, these can be very hard to buy and hold at times.
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BITCOIN FROM THE WEEKEND REPORT:
I have been discussing the Bullishness of BITCOIN over the last several weeks and this week was a real blast, also possibly enhanced by the bank failures. Take a look at this past weeks action after a dcl was put in place.
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BITCOIN WEEKLY – I also discussed that it was important to see price break above the prior highs (red arrow) when Bitcoin was in a downtrend. With Fridays surge, it closed above that point too. This gives us the start of a series of higher high and higher lows now.
I do believe that Bitcoin has the lows in place and will work its way higher over time. RIOT, MARA, HUT, HIVE, CIFR, BITF, BTBT, BTCM, etc have been and will continue to be discussed in future reports.
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