FOMC next week and Gold, Energy

The FOMC meets next week and as usual there is discussion about a potential interest rate hike. I had originally thought that the market was not anticipating an interest rate hike since for the most part the major indices have been relatively FLAT for the past 2 weeks. However, I got my head out of the sand this AM. I wish I had seen and thought about this earlier.

I noticed that the XLE (Energy ETF), Gold (GLD), TLT (30 year bond), Utilities (trade like bonds) (XLU)...All of these have had signals down on the Daily chart heading into the FOMC event next week. They have all moved down quite a bit. Since all of these are down heading into this event, it could imply that the market is pricing in a stronger dollar. The dollar can get stronger when interest rates are higher. This means that the market is pricing in a stronger dollar because it anticipates interest rates will start rising. Since it is near the FOMC event, you could imply that the Fed will raise rates next week.

If the Fed doesn't raise rates next week and doesn't really say that it will anytime soon, then any of these securities should be BOUGHT for the LONG....of course always wait for confirmation and get the "chunk in the middle".

What do you guys think!

Market calendar - after the 10th it stinks. All that other stuff is to much for my little brain:-)

I would have to agree with Richie.

On a side note though. TLT has a very nice chart. Look at the weekly for TLT. That is a kicker signal, the strongest candle stick formation and very rare. Plus it is on the weekly, plus the indicators are confirming it. I would say someone or some country is dumping our treasuries in a hurry! Rapidly higher rates could finally make for that 10% correction in a hurry. We will seeeeeeee!

I am in the camp with Richie and fireman but you make a very compelling argument. I do believe the upcoming FOMC meeting has the potential to be catalyst regardless of whether or not they raise rates. A hike is inevitable sometime in the foreseeable future and it could come a bit early. There is also the possibility of rebalancing or window dressing by fund managers over the next several weeks so that they look good on yearend statements. A lot of moving parts and potential catalysts. Just waiting for the charts to tell me what to do.

As an aside I do follow yields and the dollar on a weekly basis being as both impact my industry. I think what you are seeing is definitely tied to the fact that the dollar has been strengthening over the past 9 weeks. The dollar is approaching resistance on the monthly but overall still shows as being very bullish based on monthly / weekly. At some point you would expect some sideways action to pull back inside the bands on the weekly to digest recent gains before continuation higher. The 30 yr bond is turning over and appears to be just getting started on weekly / daily. Regardless of the FOMC announcement I think rates will be trending higher.


NCT

Can't believe I'm about to say this, but in the words of someone currently mentoring me.

You're over thinking it.




I mean no disrespect when I say that, so please no one take offense.... please!

No offense taken Simply pointing out the obvious that I assumed everyone already knew. The market stinks after the 10th, most of the time, for a reason. It has nothing to do with the upcoming FOMC meeting nor the fact that someone started writing down observations, put together a calendar and said so. Having an understanding of why that happens within context of current market conditions and, most importantly what the charts are showing, can only benefit an individual. Below is an example of when the market looked pretty darn good during the month of September but not so good in November. Again having an understanding of why things happen within context of current conditions provides clues. Remember... Sonic asked what others were thinking. Just saying...

Roger that NC. Point well made.

Can you define what is meant by 'the market usually sticks after the 10th?" I see that on the market calendar...

I said "stinks" not sticks. Well for us, being market neutral would mean that we can trade when the markets go up or down correct?. "Stinks" for us would have to mean sideways, and very very erratic right?? To me, it would also contain just a touch of a downward bias. Not much, but just a little bit :-)