May The 4th – Post Fed Reaction
Yesterday I warned about the false moves and volatility that happens on a Fed Day. As expected, we had a very volatile period of time when the Fed decision and Speech took place, but in the end the General Markets sold off and closed at the lows. Let me run you through that here…
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QQQ – This was at 2 p.m. when the rate hike was announced. Well, it looks like the markets are going to rally, right?
QQQ – Anyone that bought that ‘false rally’ was probably quite surprised and sad by the time Powell spoke. Likely they would now quickly bail out with this sharp drop…
QQQ – This is what happened over time as Fed Chairman Powell spoke and answered questions. Rally, drop, rally, drop, etc. At this point we have a green reversal again. Maybe now that he stopped speaking it would rally?
QQQ – Still choppy, so how did the story end with all of this indecision?
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QQQ – We closed at the lows. That doesn’t necessarily mean that this is ready to drop, but it does have its share of weakness showing as marked on the chart. It is overbought, The MACD is rounding lower, etc.
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THE SPX looks even a bit uglier.
1. On Tuesday it dropped, but put in a reversal candle, trying to regain that 10sma.
2. On Fed Wednesday it dropped below the 10sma, closed at the lows, and the MACD looks weak. This CAN recover, but notice that it has signs of weakness too, so we need to be cautious.
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SPX – Recently I discussed the triple top as being similar to the one in November. Is this forming an even larger H&S? It might be. We need to be cautious and keep an eye on it. This looks like it didn’t like what the Fed said, but only time will tell. The last triple top sold off into a 50 day low (dcl). This could do the same thing, and we are only on day 36.
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And Finally, I noticed that THE SPX looks like a bearish rising wedge, with a breakdown and back test. I am thinking of shorting the General Markets off of the highs here ( SOXS, SQQQ, etc). I am hearing that another Bank (PacWest Bank) is in danger of failing, even though the Fed said that the banks are in good shape now.
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LABU was mentioned (again) yesterday as a bullish set up. It was up over 16% at one point, but closed up 13.3%. This did NOT follow the General Markets and this remains bullish.
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WHAT HAPPENED TO OIL??
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WTIC- Oil broke out on that OPEC announcement when they said that they would cut production. It dropped back to a gap fill, but it lost the wedge and over the past 2 days Oil started to crash. IT IS STILL POSSIBLE that this is an ICL and we have a 1-2 of a 5 wave here. As long as ‘2’ doesn’t break the March lows, but the real point is this… You definitely would be stopped out of Oil by now. OIL Looked very bullish just last week, and THIS is EXACTLY why we use stops.
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Heading into the Fed Mtg, the USD was putting in a small bounce. I have been pointing out that this bounce looks similar to the one that was rejected at resistance during the last sell off. Did the Fed Mtg cause a Breakout for the USD.
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USD – Nope. No rally here on Fed day. The USD was rejected where I thought that it would be. 🙂
USD – So this is what I was pointing out in prior reports, and at this point, that FED Rate Hike dropped the USD at resistance. Gold & Silver were due for a dcl, and the USD was at resistance, so this could be a very bullish set up.
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LET’s TAKE A LOOK AT GOLD:
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GOLD RALLIED FROM $2022 to $2034+ AT 2 P.M. WITH THE RATE HIKE. A quick $12 rally. This looks great, right?
Suddenly, GOLD lost that rally as we started heading into the Fed Speach. This was a POP & DROP in Gold. So now we’d have to see what happens, but with a DCL in place, it really shouldn’t sell off below the lows that you see here.
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GOLD continued to sell down and lost that $12 rally. As seen here, it then started to chop even lower and it dropped down to $2017. This made it look like Gold might sell off on the Fed day. Wait until you see what happened next! …
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That little blue box is what we were just looking at during the 2 p.m. Choppiness. That box contains that Fed 2 p.m. Pop & Drop.
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GOLD then rallied higher in the final hour and also into after hrs, which is included here. This is the Gold chart at 9 p.m. ET. It is starting to pullback, but that was a nice rally into after hrs, and please keep in mind that that rally to $2080 does not show up on the daily chart.
GOLD was at $2037 at the close and looks good, but remember that it then ran to $2080! That would be New Highs!
So this is SPOT GOLD and yes, it made new highs in after hrs. This does continue to look like a large Cup and Handle break out and is acting bullishly.
GLD is a nice example of a post fed bullish move. It can just run higher from here, but …
Please note my arrows. Notice that after a big move higher, it is not unusual to see a small pullback for a day or 2. I just want for us to be prepared, that if Gold is down on Thursday, that can be normal price action.
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SILVER responded bullishly on our Fed Day too.
GDX was choppy during that Fed Speech, so it appears to only have a tiny move. Well, after hrs it ran up to $35.35 and that puts it much closer to the April highs.
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We have been looking at Miners for a few weeks now. I have pointed out leaders like the S. African Miners DRD, HMY, GFI, AU, OR, etc, and Laggers. So let’s take a look at a couple of Miners Post-Fed.
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DRD – It certainly does look like the leaders are leading.
HMY has been another one of my favorites, and it did not dip very much recently. Instead, it consolidated sideways in a bullish box consolidation like DRD. This also has follow-through to yesterdays bullish break out.
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Yesterday I pointed out this set up for KGC. It dropped during the Fed Mtg and closed up only 4 cents higher than this, so this is still a good buy. This is a S. African Miner and they have been outperforming on that last run too.
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NGD was lagging during the first intermediate cycle year, but this last daily cycle saw NGD go from under 85 cents to $1.45. It could pause as a buy here, or it may just run. Either way, I like this set up for the next leg higher.
MUX has been on a good run since September and it has actually tripled from $3 to $10! If you believe in ‘Buy the dip’, this was the dip and it is still at the lows.
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So we had our Fed Rate Hike and the fed Speech saw Powell saying that they are determined to fight inflation and raising rates is fine, since the Banks are now in pretty good shape. This is PacWest in after hrs last night when I heard that they may be the next one to fail. It is down over 50%.
The first 2 banks that failed recently was bullish for the Precious Metals, and I have pointed out how that drop into an ICL in March seemed to be cut short when those 2 banks failed. We saw another one in need of a buy out this week and another may be on the way out. With the Precious Metals Sector being set up bullishly, this banking weakness may be helping Gold to be viewed as a safe haven investment. I am not so sure about the set up for The General Markets though. We may be setting up for a choppy drop into the next dcl there. In an interesting twist, when the USD dropped yesterday, Gold, Silver and Bitcoin all moved higher. Yes, Bitcoin moved higher as the General Markets dropped, so we’ll take a quick look at that too.
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If Gold ‘pauses’ and dips over the next day or two, that may be an opportunity to add to your Miners. Enjoy your Thursday trading.
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~ALEX
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BITCOIN was following the General Markets for a while, but please take note of the fact that the General Markets closed at the lows, right? Gold & Silver closed at the Highs, and what did Bitcoin Do? It held up green above the 50sma. It is possible that gold, Silver, and Bitcoin are all becoming safe haven investments.
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MARA – I have been discussing the bullish set ups in MARA, RIOT, HUT, HIVE, CIFR, CLSK, etc. We can also trade BITF, BTBT, BTCM, and others as long as you are aware when they release their earnings. MARA has run from $3 to $12 and now rests at $8. The stochastics is finally getting oversold again.
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RIOT has been consolidating and like Mara, it is near support and the stochastics is finally reaching oversold again.
