Wednesday January 31st – F.O.M.C.
Today is a Fed Day, and currently no one is expecting a Rate Hike or a Rate Cut at this point, but the language that Fed Chairman Powell uses in his speech will be what everyone is waiting for. The markets really haven’t changed from yesterdays report, but they do usually get volatile on Fed Days, so we should expect that. I had a longer report yesterday with lots of stock picks, so this will just be more of a Fed Day review. As you know, we then should expect volatility and choppiness at the 2 p.m.-4 p.m. hrs.
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SPX – This was day 17 of a possible 35-40+, and The General Markets have been very bullish. I decided to point out what followed the last 2 Fed Mtgs – see the chart. The markets continued higher, because the idea is that the Fed will cut in the future.
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TLT – After a small struggle under the 50 & 200sma, Bonds popped higher yesterday. This looks like day 4 of a new daily cycle actually, and TLT should move higher.
WTIC – Oil lost that 200 sma on Monday, but it regained it again yesterday. Oil has been choppy, but it is bullishly moving out of the lows too. This is day 31 of anywhere from 45-50 plus days. It has time to continue higher.
The USD is chopping sideways as we head into the FMC MTG. It is crawling along the 200sma and above the 50sma, and that is often bullish price action, but I did also place arrows at the last 2 Fed Mtgs and notice that price actually sold off following those meetings. The USD could drop into a dcl after this meeting too.
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If the USD drops, we would expect that GOLD can Pop back above that 50sma. We do have a new dcl in place, so it can still pop and become L.T., so I am not thinking that this will lead to a strong rally. And…
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And…
GOLD popped for 2 days , but then moved lower after the Nov 1 Fed Mtg (Into a dcl), and sharply higher after the last Fed mtg, so we’ll just have to wait and see how it reacts today.
SILVER sold off after Nv 1 Fed Mtg and it also Popped Sharply after the last one.
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GDX –
1. We had an FOMC MTG on November 1, and what we saw was a Wed, Thursday, and Friday Pop, but then it sold off the following week. Why? A dcl was due.
2. That means that we could see a pop here too, but eventually a drop maybe next week too. Why? It may be bullish ‘Fed Cut’ news for later in the year that gives us the knee jerk reaction ‘pop’, but we are coming due for a drop lower soon in The Precious Metals sector too. Right now, GDX is struggling at the 20 ema and a downtrend line. A POP may get it to the 50sma.
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So it is an FOMC Wednesday and we often see some choppiness and volatility around the final 2 hrs of the day. The last 2 fed mtgs were bullish reactions with the idea that 2024 could include Fed Rate Cuts. That said, Chairman Powell does NOT like to admit that, he is very guarded in his wording, so we’ll see what happens. Overall, the General Markets are bullish, Oil is choppy yet Bullish, and the Precious Metals have been choppy and are getting late in the intermediate cycle. A 4th daily cycle can POP on good news, but the follow through would likely not last into next week. The drop into the next ICL will be a strong buy though, with Gold possibly breaking to new all-time highs with possible rate cuts in 2024. Enjoy your Fed Day Trading! 🙂
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~ALEX
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BITCOIN : I have fully explained my thoughts on Bitcoin in the last couple of reports;
Bitcoin is rising up out of a dcl, but it is hard to say how high it can rise up. I was expecting a drop into an ICL, and if that still takes place, Bitcoin will eventually tire out and sell off lower again. It should not break to new highs if it is to fall into an ICL.
