Yesterday was a big day for the financial markets, as investors awaited the FOMC statement. This one was a bit more important as it was Fed Chairman Jerome Powell’s first official meeting.
The initial reaction was higher, but the S&P 500 quickly reversed lower to close read. This price action has me holding onto my short-term bearish outlook for a bit longer.
There were some interesting technical developments that occurred yesterday. Here’s 5 of them:
1.  Stocks failed to show any signs that the downtrend was complete. The S&P 500 finished down on Powell’s first official FOMC meeting as Chair, despite many thinking it went over quite well.  $QQQ and $SPY finished near lows of the day, while the Financials $XLF and Industrials $XLI, both wrestling with Triangle support, failed to show any signs that they had gotten back over key areas of importance. Overall. Still looks early to think lows are in place for S&P 500. Under 2697 looks increasingly likely, which should lead to 2651-60.
2.  The US Dollar fell right back under prior days lows, and particular technical breakouts vs Pound Sterling along with Mexican Peso. (UK meeting Thursday where its widely thought that a rate hike should happen) The Euro remains still range-bound vs Dollar but movement up above 1.242 is expected in the days/week ahead and should allow for EURUSD to begin trending higher again as well vs the Buck
3. Â Commodities showed signs of bottoming after recent weakness and Precious metals in particular, broke out, with both Gold and Silver moving above key trendlines. Grains seem to have stabilized after recent weakness, while Crude oil furthered its breakout and managed to move all the way higher to near prior highs in the mid-$60s before stalling out.
4. Â Treasuries managed to rally post FOMC with yields backing off from highs near 2.93 to levels under 2.89. This prevents a yield breakout in the 10-year yield, while 30-year yield failed to even get close to breaking out. The yield curve meanwhile steepened after the last few weeks of flattening.
5.  Markets seem to have shown meaningful reversals in Treasury yields, breakdowns in the US Dollar while commodities broke out. These new trends could have a chance at extending given that they all happened simultaneously post FOMC, while Stocks continue to trend lower. Given that no major catalyst lies on the horizon for the immediate future, there’s no guarantee that trends that have been set in motion post FOMC ( after the initial sharp movement which largely was reversed), will cease right away.
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Twitter: Â @MarkNewtonCMT
Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
