good morning traders -

since the fed is in focus today, i thought i would throw out a quick question. everyone seems to believe there will be no change in fed rates today, so all are awaiting to see if comments are dovish or hawkish.

my question is in regards to interest rate hikes. it is my understanding that an interest rate hike helps strengthen the USD. if so, isn't that bad for gold because of the inverse relationship between the USD and Spot Gold?

i presume in the long run a hike rate means the fed is acknowledging inflation, therefore gold might go higher - but i would then argue, gold would go down, because the fed is taking the steps to fight inflation. so the bullish action for gold would be a dovish comment by the fed.

thoughts?

btw - nice call on AMZN yesterday Tradesman. You have a good ear to the ground!

lastly - it seems to me earning have been exceptional on the net whole this season. even though the market is due for an overbought correction, the valuation for the SP500 appeears to be in line with the latest move (because of the improved overall earnings). The valuations I have for the SP500 are 16-16.5x 2007 earnings (pre these announcements).

Now with the existing home sales out (slightly below consensus, but within range; actual number was 6.18M, consensus 6.23M ), the builders are once again in the rally mode. One can only guess what happens after FOMC rate announcement, which will very much depend on the language, since the Fed is expected to hold; but weak housing number doesn't lend any support to Fed's bullish stance.

The Utility Index may be telling us something...

It is up an astounding 8% in about 12 trading days.

The daily RSI is off the scale - its only been this high in 2000 and 1998

Most of the time it has reached this level on the daily either it (or the market) had a sharp drop with 3 months.

However the weekly RSI is still not that high...

Anyone follow this?

Golds and Oils liking Bushes 'War' talk this a.m.

Shorts got nervous I guess...

Rest of market doesn't care...

Can't have it both ways...

Gold, oil, utilities, semis, NAZ, transports - all up?

Wars and goldilocks can't coexist exist for short periods of time.

Everyone seems to have priced every possible scenario into this market simultaneously.

Someone's going to get hurt.

My shorting fingers are getting itchy - what will it be - golds, oils, NAZ, DOG????

above... post should have read...

Wars and Goldilocks can't coexist EXCEPT for short periods of time

l709, the HB stocks are getting played within a range. Nothing fundamental is behind their tepid rally today. The existing sales numbers are BAD any way you want to cut it, and on top of it, the median sales price is down (again). Remember when we were told that would NEVER happen?

So many things are overbought - indices, ETFs, foreign ETF's, TSX

Oils are overbought if one assumes they went into a bear market...

I can't imagine Fed wants to inflate it all right now - so this is just a general markup for fiscal end of year.

I will short whichever cracks 1st...

I hope everyone caught Calculated Risk's "catch" of the NAR fudging this mornings already bad numbers. According to the site author, they changed their seasonal adjustment without telling anyone! CR's explanation of how he caught them is in the Comments.

http://calculatedrisk.blogspot.com/

What a bunch of duplicitous scum this group is turning out to be.

MarkM

thanks for the link...

The interventionists are in trouble - they have now resorted to lies, fudging, restating, revising, pumping markets...

one wonders for how much longer traders are going to buy this B.S

I expect oil and gold to trade lower - because they are desperate... so will short IF charts confirm this view...

We may get a hint of 'their' intentions if 'certain' things trade lower after their PR today.

Cycle wise, expect a reaction in the days to come:
$SPX at 1290 in three weeks; 1265/1265 in 8-10 weeks!

Read 1275/1265 in 8-10 weeks.

Oldsoothsayer...

what cycles are you using? just curious...

---

btw.. looks like most shorts are out of the market - when they tried to run it up after the Fed release - the S&P went no where...

.. but buyers still here...

Hi Bill & All

See my latest gold and silver charts analysis, here:

http://globalgold.blogspot.com/

SoccerMatt,

In the short term, the $usd has been trading on global interest rates, so if the yield differential increases for the dollar as the fed hikes, then the dollar should rally as capital flows into the US.

Where it gets interesting is that if rising interest rates hurt the economy, then tax revenue will drop and the US will need more foreign capital flows to cover our expenses. In other words, the Current Account Deficit will grow and this will negatively affect the $usd and gold will rise. If a country can't cover it's own expenses, it's currency will decline in value. Believe it or not, the US can't cover it's own expenses - rather embarrassing from a global standpoint.

This situation could happen:
Fed increases liquidity to stop a housing market collapse or recession (as seen in the hidden M3).
This liquidity creates inflation. The fed has to hike rates to slow inflation. Rising rates hurt the economy. That is Stagflation.

BTW, if the fed gets behind fighting inflation, like during the 1970's, gold will rally as interest rates rise. Gold rose to $800 plus until Voelker came in and put a stop to inflation by raising rates which rose to 18 - 20%. Yes, rates that high.

Good luck all.

OK thats it...

From now on I am just going to program my computer to buy at 10:30 and 14:30..
Then I can spend the rest of the day outside rather than looking at silly screens all day...

Apparently this market has become a no brainer...
I see lots of fund buying into the close and they don't appear to care what they are buying - - after all they are missing out and must get in right away to look good for the month and fiscal year - I mean what the heck - its other peoples money anyways...

The market action the last few weeks shows that Alan Greenspan was overrated...

Everyone all together now... lets 'Boogie with Ben'

thanks g034! much appreciated. I had a hunch you'd be the one with the answer! :-)

based on the XAU and GDX charts, i'd say the gold miners are on their way...what a day! nice to see a solid move in the miners pre spot gold itself.

i think a lot of people are out of this market (Dow, NAS, SP500), waiting for the (over bought) correction.. seems like that is when the markets do their biggest moves... when everyone expects something else to happen. i know its gonna turn (so i am out 50% of my positions). I believe patience will be the real winning strategy. i.e get in at attractive prices, not high prices.

energy and metals turning up under the blanket of high dow, "stay put" fed, and election distraction....

Just a thought:

Many Semi Conductor companies are warning about decreasing sales next quarter -- manly from slower TV and Phone sales. I think Notebooks are still strong, but desktops maybe down a little or flat.

But, These Semi Cons keep rocketing. Sounds like 1999. Might just be 1999.
If it is, we can test the waters through Daytrading the hype and investing in sound fundamentals.

I'm with you on that...

If they bust NAZ through its May high that will set off a lot of bells and whistles and cheerleading...

... and if AMZN keeps going up - that would confirm to me that we are in a 1999-type scenario rather than a healthy new upmove.

Too many people are still shorting the market.
Too many people are shorting stocks on bad news - and then get run out of their positions by organized raids against them.

The time to short will be when the market rolls over on volume - then one can short all the 'crap' like AMZN that was run up or squeezed to high heaven.

Today the oils and golds were offering the best daytrading (which surprised me as I thought the Fed might have their thumbs pressing down on them - but the charts said otherwise)

I was looking for a pullback - but were not getting it - so I guess its momo and gaps for now...