Buzz Bits: Fed Raises Rates, Markets Drop
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"What'd you think, son? That I was just some crazy old coot, putting everyone in harm's way as I yelled "YEE-HA!"?" Capt. Frank Ramsey., USS Alabama - Todd Harrison - 2:23 PM
Boom Boom has spoken and the FOMC missiles are officially in the air. As the Street sorts out the emergency action message, my eyes alertly scanning the following blips on the radar:
- Citigroup: $48 is a pretty big level and as the piggies are the proxy of "all things financial," this is a particularly important juncture.
- Breadth: The single best intraday tell when skewed 2:1 either way. (it's still flattish)
- The metals. With "further firming" possible, I'm watching the XAU for signs of slippage. I made 'some' silver sales earlier and will look to add exposure in this complex with any significant slippage.
- S&P 1300. This is about as hawkish a headline as we could expect. If Boo can't break this level, the "can't get 'em down" chorus will surely begin.
- Fed Fund Futures: They're pricing in a 93% probability of a May hike and a 22% shot an an udder one in July.
- The green monster: If we were in the extra innings after the eigth tightening, we're almost on our third consecutive game!
Fare ye well Minyans and please leave emotion for weddings and funerals.
Position in metals
Flashback! - Bill Meehan - 2:11 PM
This day in market history...
- Closing levels 10 years ago
- DJIA: 5,630.85
- Naz: 1,094.83
- S&P 500: 648.94
- Crude: 21.45
- Gold: 398.70
This day in Minyanville history...
- Prof. Goepfert answered a question on Dow Futures and Large Speculators
In other news...
- In 1977, Rocky won the Oscar for Best Picture, Director & Film Editing.
On the Margin - Kevin Depew - 1:29 PM
- With FOMC actions fully priced in, the market feels like it's basically just waiting to see if Bernanke's Fed can reprint the last meeting's statement. A duplicate statement suggests a sigh of relief, no?
- With my systems down I have no access to commodities quotes. But I can easily tell how things are going based on the margin calls.
- Fresh acne in Oil and Oil Services: Baker Hughes (BHI), Anadarko Petroleum (APC), ConocoPhillips (COP), Nobel Affiliates (NBL), and Weatherford (WFT) among those with fresh breakouts today.
- Boyd Gaming (BYD) broke a double top today at 48, next level of resistance 50.
- The Claw!
"The kids love it when I 'get down' with them, verbally." - Jeff Macke - 11:40 AM
For years, whenever you've heard the name Al Gore, the natural response has been to wonder when, oh when, would this man have a medium which would allow him to communicate directly to his core-audience of rabid followers, young people between the ages of 18 and 34.
"My 20-year college dropout son is only passionate about three things" you may have rued, "tattoos, piercings and the smoldering charisma of Al Gore. With more Al in his life, maybe 'Hate-Monger' would think about moving out of the house."
Finally, help is on its way with the announcement that Comcast (CMCSK) will pick up Al Gore's Current TV network beginning June 1st. Tragically, Generation X remains rudderless and all but forgotten, jammed between our looney Boomer parents and their Al-Gore-Hogging Gen Y second families.
XAU – Into Targeted Resistance - Tom Peterson - 10:30 AM
The XAU and HUI took a pause last week in their rallies from the March 10th low, but managed to reassert their uptrends by the end of the week. This is normal. The targeted time window of March 23rd to March 31st for the peak of the current rally is now upon us.
The upper level of the measured resistance at XAU 137 was achieved yesterday. However, the Variable Volatility Band (currently 142.70) is likely to be tested on an intraday basis, capping prices during the projected price/time window.
The Relative Strength Index is now at 56 and any reading of 66 or higher should become a cap for this move and a selling opportunity for traders. Even if it manages to exceed this level the next downside correction should bring prices below the levels achieved with the overbought RSI(14) reading.
See the chart here.
NOTE: While it may seem a bit premature, it may be time to look forward to the next buying opportunity. The complete ABC correction into March 10th occurred above the long-term (200-day) moving average. This implies that the next downside correction should produce only a mild pullback in the RSI(14) oscillator. A break of 16 to 25 points that brings the RSI(14) below 50 should provide the next low risk buying opportunity in gold and silver mining stocks.
Well here we go , last cycle coming low into end of negative seasonality in bonds. - Bennet Sedacca - 9:35 AM
The final leg of negative seasonality in bonds, which we have been talking about for months and months and months, is upon us - cycle low date 4/24. No, I am sorry, but I can't say where it comes from. But as I mentioned here, the cycle high was last Friday - on the screws I might add.
So, what are the targets? What do you wanna use? Futures? New 10's? Old 10's? Old old 10's? I JUST THINK NEW LOWS. Pick your poison. 5's in "on the run 10's" will be breached long after after the old 10 and future. I still think convexity sellers END THE MOVE and we will know when we see it - a LONG BAR DOWN - they are computer driven models and don't care about prices.
We are STILL hiding in bills and 2 year notes, and I have to admit to having no clue to what Ben will say later. I don't think that that by 4/24 it'll matter. I agree with Todd. The first move will likely be a fake out. I am just gonna watch and wait. Continued note to self - NEVER TRADE JUST TO TRADE. TRADE WHEN IT'S OBVIOUS AND ODDS ARE CLEARLY IN YOUR FAVOR.
Position in treasuries
A Pre-FOMC 'Postmortem' - William Fleckenstein - 9:20 AM
To belabor the obvious, I believe that if the Fed pauses, stocks will rally. Will the rally last a couple of days (because the easing has been discounted), or a few weeks? My guess would be -- longer rather than shorter, even though I think that everyone with a bullish bone in his body wants to have as much money as possible committed before the Fed decides to pause. However, I believe that there will still be some who won't commit the last of their money until the Fed has actually paused.
If the Fed doesn't pause and continues to appear tough, I would expect a selloff, though I'm not sure how far that would carry. Regardless of whatever selloff ensues, the real opportunity on the short side will come only after the Fed is done.
Conversely, I believe that the precious-metal and foreign-exchange markets will rally in the event of a pause, although they too could be susceptible to some sort of profit-taking similar to stocks (as folks try their hand at the proverbial sell-the-news trade). Similarly, if the Fed isn't done, there will be a setback in the metals and currencies, though I don't know how long it will last.
Whether this week turns out to be approximately the inflection point I've been awaiting, or it's a bit down the road, I don't know. But in any case, I believe we are close.
The Domino Effect - just waiting for another push. - Rod David - 7:57 AM
As S&Ps recovered into positive territory Monday afternoon, NYSE up volume was outpacing down volume. The positive spread persisted until the last hour, but advancing issues never overcame decliners. Had S&Ps finished the day in positive territory, internals would have "diverged negatively." It did not, and they did not, but internals certainly weren't accumulative. In fact, at the close, down volume was again ahead of up volume, and by a smaller ratio than between declining and advancing shares.
The Globex session has had at least two distinct legs. After initially extending Monday's last-hour pullback to ESm 1309'50 for basing, a surge to 1313'50 probed Monday afternoon's highs - twice, while MACD and RSI diverged negatively. Another drop has now sent S&Ps back under 1310'00. There is room for a bounce, and also justification as pre-FOMC jitters start to paralyze price action. But the complete retracement back to the basing pattern suggests its eventual break. Its target is essentially Friday and Monday's lows, where repeated testing continues to chip away at their support. And if broken, new lows are likely, possibly today in the FOMC decision's wake.
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