The reaction to the Fed is almost always positive for the stock market and yesterday was no exception. The Dow ended the day up 74-points and it was in negative territory before the policy statement announcement. It wasn't just stocks that rallied, but bonds, gold, oil, and other commodities and much of that was a result of a sharp decline in the dollar. These kind of reactions do not always hold in the days following the FOMC meeting, so the next couple of days could be more telling than yesterday's action.
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The Fed has become to the market much like a co-dependent enabling parent is to a troubled young adult who is addicted to drugs or alcohol. If you threaten to stop supporting them with the fuel to keep their addiction possible, they throw a fit and the parent usually gives in. Deep down the parent and the young adult knows that they will not let them live in the streets so the pattern never changes.
Check out what happened to the dollar and to gold after the Fed announcement... You can understand why gold (and oil) would move higher when the dollar falls, but once again the strength in gold during this market rally is
s.
The S&P 500 (C-Fund) gained 0.56% triggered by the Fed's dovish statement and the bear market rally is starting to get long in the tooth and may in fact turn into a bull market if the bears can't take back control very soon.
The upside target of the head and shoulders pattern was the middle of the head, which coincided with the large open gap, and that is now filled. The bears have let every line in the sand get hit and it's time for them to make a move or let the bulls officially take over.
The small caps (Dow Completion Index / S-fund) have fallen below a rising wedge (bearish) but look to be in a bullish flag.
The Dow Transportation Index made a new 2016 high but is again testing the 200-day EMA.
The EFA (EAFE Index / I-fund) rallied to fill its recently opened gap and remains in a rising channel but below the 200-day EMA.
Gold rallied after the Fed policy statement yesterday, and the bullish technical picture for gold remains intact after the 20-day EMA and pennant support line held. Interesting situation with stocks also rallying.
The AGG (Bonds / F-fund) hit the bottom and the top of the pennant formation yesterday. Something is going to have to give here. This formation does have a tendency to break in one direction, fail, and move into the opposite direction so any breakout will have to be confirmed by 3 to 5 closes above or below the pennant.
Administrative Note: The March Madness Tournament Contest has started in the forum so if you have any interest in joining, please click on that link. It's free and there are prizes for the top picks. The entry deadline is Thursday at noon ET.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
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The Fed has become to the market much like a co-dependent enabling parent is to a troubled young adult who is addicted to drugs or alcohol. If you threaten to stop supporting them with the fuel to keep their addiction possible, they throw a fit and the parent usually gives in. Deep down the parent and the young adult knows that they will not let them live in the streets so the pattern never changes.
Until the Fed let's the economy work on its own accord, the pattern of market rallies triggered by dovish monetary policy will continue until there is a disaster. It's likely a matter of when, not if. But that doesn't mean stocks won't continue higher in the interim. We're in uncharted territory. The Fed is watching Europe and the ECB closely as they are a little further down the road in the process then we are, which is actual moving to negative interest rates. "We are looking at the experience in other countries and I guess I would judge, they seem to have mixed effects, some positive and some negative things," said Yellen.Check out what happened to the dollar and to gold after the Fed announcement... You can understand why gold (and oil) would move higher when the dollar falls, but once again the strength in gold during this market rally is
s.
The S&P 500 (C-Fund) gained 0.56% triggered by the Fed's dovish statement and the bear market rally is starting to get long in the tooth and may in fact turn into a bull market if the bears can't take back control very soon.
The upside target of the head and shoulders pattern was the middle of the head, which coincided with the large open gap, and that is now filled. The bears have let every line in the sand get hit and it's time for them to make a move or let the bulls officially take over.
The small caps (Dow Completion Index / S-fund) have fallen below a rising wedge (bearish) but look to be in a bullish flag.
The Dow Transportation Index made a new 2016 high but is again testing the 200-day EMA.
The EFA (EAFE Index / I-fund) rallied to fill its recently opened gap and remains in a rising channel but below the 200-day EMA.
Gold rallied after the Fed policy statement yesterday, and the bullish technical picture for gold remains intact after the 20-day EMA and pennant support line held. Interesting situation with stocks also rallying.
The AGG (Bonds / F-fund) hit the bottom and the top of the pennant formation yesterday. Something is going to have to give here. This formation does have a tendency to break in one direction, fail, and move into the opposite direction so any breakout will have to be confirmed by 3 to 5 closes above or below the pennant.
Administrative Note: The March Madness Tournament Contest has started in the forum so if you have any interest in joining, please click on that link. It's free and there are prizes for the top picks. The entry deadline is Thursday at noon ET.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
