Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022
Quantum AI Tech Stocks Portfolio Current State - 4th Jan 2022
The Alibaba Stock Market - 4th Jan 2022
Will Gold & Silver Be Investment Outcasts in 2022 Again? - 4th Jan 2022
Stock Market Happy 2022 Entry - 4th Jan 2022
Complete paradigm shift will make Gold the generational trade - 4th Jan 2022
Corsair MP600 NVME2 1tb Drive Sudden DEATH Failures - Back Up NOW! - 4th Jan 2022
AI Tech Stocks Portfolio Updated Buying Levels and Zones Part 2 of 2 - 3rd Jan 2022
Stock Market Sentiment Speaks: 2022 Can Be Your Best Year Ever - 3rd Jan 2022
2020-22 - Soaring costs of the West's Pandemic failure - 3rd Jan 2022
AUTODESK (ADSK) - CAD - Metaverse Stock Analysis Investing for 2022 and Beyond - 2nd Jan 2022
Stock Market Sector Themes In Play For 2022 - 2nd Jan 2022
Excuse Me Mr Gold. What Year Is It? - 2nd Jan 2022
Stock Market Early 2022 Should Continue Melt-Up Trend In January / February - 2nd Jan 2022
UK Energy Crisis WARNING 2022 - How to Avoid Huge Increase in Gas and Electric Fuel Bills Right Now! - 1st Jan 2022
Why You Need A PR Expert For Your Financial Startup - 1st Jan 2022
TENCENT- Chinese High Risk GAMING Metaverse Stock Analysus for Investing 2022 and Beyond - 31st Dec 21
Gold Price Forecast 2022 - The Golden Year - 31st Dec 21
Will 2022 Be Better for Gold Than 2021? - 31st Dec 21
Gold Stocks – Wishing And Hoping (And Losing) - 31st Dec 21
Sheffield Christmas Market 2021 SANTAS GROTTO at Peace Gardens, City Centre Sights and Sounds - 31st Dec 21
Nvidia Leaves planet Earth - AI Tech Stocks Analysis - 30th Dec 21
Google (Alphabet) AI Tech Stocks Analysis - 30th Dec 21
Stock Market Santa Rally Challenge - 30th Dec 21
Sheffield Christmas Market Stalls, Sights and Sounds 2021 - 30th Dec 21
Investment Roadmap for 2022 - 30th Dec 21
2022 – The Year of (Gold) Inflation? - 30th Dec 21
Overvalued Stocks and Housing Perfect Storm for Gold - 30th Dec 21
My Most surprising Crypto call to date - 30th Dec 21
What is a Rehab Clinic and How It Is Beneficial for People? - 30th Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Has the Dust Settled After Fed Day? Not Just Yet.

Stock-Markets / Financial Markets 2021 Jun 18, 2021 - 06:21 PM GMT

By: Mike_Paulenoff

Stock-Markets

I am going to look at a few markets (ES, Gold, DXY) that have reacted significantly to the Fed's "message" from yesterday afternoon. What's the message? Here's my synopsis:
After pumping $8 trillion into the economy since March 2020 to provide the necessary stimulus to emerge from the pandemic lockdown, growth is relatively strong, inflation is finally above our 2% benchmark-- though probably will prove to be a transient blip, but the labor market remains well-below Full Employment... So we think we might need to raise the Fed funds rate a measly 25 basis points at the end of 2022, and maybe another measly 25 basis points at the beginning of 2023. In the interim, nothing really will change.

If my synopsis of what the Fed said yesterday (remember, they didn't DO anything) is reasonably on point, then we see a host of previously one-way markets reacting to "the news" with counter-trend moves that should prove to be a healthy refresher of their still powerful dominant trends.


In overnight action, the Emini S&P 500 (ES) rolled over into a nose-dive that marginally violated yest's post-Fed low at 4190.25, and pressed to a new corrective low at 4183, which was the exact measured target zone (4180/85) off of the Round Top Formation that we discussed yesterday afternoon. Now that the measured move has been satisfied, we have to see if ES can sustain strength off of 4183, and carve out a rally that exhibits bullish form, which will provide us with clues that the correction is over, and a new upleg has commenced.

In that we have Seasonal and Presidential Cycle weakness (McClellan) theoretically ended between June 17th and June 24th, the window for BOTH a significant pullback low AND powerful upside reversal is upon us. We have to look out for a severe oversold condition, signs of downside exhaustion, and then a potentially violent technical upside reversal to alert us to the end of the corrective period and the resumption of the still-dominant uptrend.

At the moment, based on the set up shown on my 4 Hour Chart, I am thinking that any ES bounce fails at or beneath 4220, and that ES rolls over one more time to violate 4183.00, pressing into the 4165 to 4150 lower target zone prior to completing a 2.2% to 2.5% correction off of the ATH at 4258.25.

As for Gold's reaction to the Fed, it wouldn't feel right or "natural" if Gold prices withstood any mention of higher rates two years down the road, despite the fact that inflation is starting to percolate amid continued super-accommodative monetary (and fiscal) policy!

Nah... Just the mere mention of higher rates "eventually" is enough to trigger algo sell programs that unwind weeks of Gold upside in a matter of hours. The last 24 hours is more of the same. August Gold has declined from 1870 to 1795.70, or about 4% in a matter of hours in reaction to the suggestion from Jay Powell that rates MIGHT have to uptick 25 to 50 basis points perhaps at the end of 2022, but more likely at the beginning of 2023.

It would be laughable if actual investment capital wasn't being destroyed by the knee-jerk manipulation of the algos and the big banks. Perhaps this cabal of manipulation against the precious metals that has been ongoing for decades will have its final days come the end of June with the implementation of the new Basil III accords? We will discuss that in the upcoming days, but for now, let's notice that August Gold is down $61.40 (-3.3%) at the moment, and has sliced beneath the 100 DMA (1800.40), and has pressed into key Fibonacci support representing the 50% to 62% retracement of the entire prior upleg from the 3/08 low at 1678.20 to the 6/01 high at 1919.20.

Bottom Line: If the March-June advance IS the initiation of a new bull phase in the aftermath of the August 2020 to March 2021 correction, then August Gold selling pressure should exhibit exhaustion, and turn up from somewhere at or above $1750.

Of course, the extent of the correction and the timing of the next upturn could be very much dependent on the counter-trend rally of the US Dollar, shown on my Weekly Chart of DXY. From the look of the current set up, DXY is heading still-higher, to challenge resistance at 92.40 to 93.40 prior to my expectation of a downside pivot reversal and resumption of the dominant downtrend.

From a bigger picture perspective, current strength in DXY represents an oversold bounce off of multi-year support at 88-90, within a still-dominant and powerful downtrend off of the March 2020 high at 102.00. That dominant downtrend do not exhibit completion, which if accurate, means that after this counter-trend bounce runs its course, DXY will roll over into a nosedive that break 88-89, unleashing a torrent of Dollar selling that could drive it to 82 to 80 in the weeks and months thereafter.

If such a big picture scenario unfolds, Gold will enjoy powerful tailwinds from Dollar weakness.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

Sign Up for a Free 15-Day Trial to Mike's Live Trading Room!

© 2002-2021 MPTrader.com, an AdviceTrade publication.  All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in