Lift off in 10-9-8-7 - Houston we have a problem

October 28, 2015 - 5:44pm

 by Gary Wagner

The central bank concluded this month’s FOMC meeting earlier today, alluding to the potential that rate hikes or “lift off” could still begin in December 2015.

Whether or not the initiation of rate hikes will begin this year is not off the table according to recent statements made by the Federal Reserve.

“In determining whether it will be appropriate to raise the target range at its next meeting, the (FOMC) committee will assess progress … toward its objectives of maximum employment and 2% inflation.”

According to the Fed it is still possible that lift off will be initiated at its next policy meeting in December. However this statement lacked any real specifics about the particular data points that would be needed to initiate a rate hike this year. In other words we are left with no more clarity then we had prior to this month’s FOMC meeting.

The reactions to statements made were clear-cut. The US dollar continued its upward climb trading almost ¾ of a percent higher on the day. US equities which had been under pressure, reversed and staged a dynamic rally, taking the Dow Jones industrial average almost 200 points higher on the day.

Gold saw a return to the selling pressure prevalent in the precious yellow metal since trading to an intraday high of approximately 1190. In fact gold traded to an intraday high of 1183 as it traded overseas last night, that however was to be short-lived. As the US dollar regained its composure and began to trade strongly higher on the day it pulled gold down with it.

Interestingly gold was the only precious metal to trade lower on the day, as the other three precious metals (silver, platinum and Palladium) were able to overcome a strong dollar closing in positive territory. According to the Kitco gold index, US dollar strength decreased the value of gold by $8.40 per ounce, whereas normal trading also decreased the value of gold by approximately three dollars.

Although the vast majority of analysts and traders did not expect any kind of rate hike to be initiated this month, most also believed that a rate hike beginning in 2015 was not in the realm of real possibilities.

Rather than adding real clarity, statements made at the conclusion of this month’s FOMC meeting were muddled at best.

However what was highlighted is the fact that a rate hike this year is not off the table. That being said a rate hike initiated in 2015 is in this author’s opinion still highly unlikely

It seems like every time the Federal Reserve initiates countdown to lift off, we hear “Houston we have a problem”.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

We have no active trades as we are awaiting technical evidence that the current corrective wave has concluded. See market forecast for details.

Gold Market Forecast

Ever since gold prices traded to a higher high at 1191, gold has been in a corrective period. Our current model looked at the real possibility of some sort of an A, B, C correction.

Today's video report will detail why we believe that there is technical evidence that gold prices have concluded a counter wave (B wave), and is currently completing the final "C" of this correction.

Based on this assessment we believe gold prices could falter a little bit more possibly as low as 1150 and then find support.

Trending Markets: Proper Action

This morning we sent out a special trade alert recommending the initiation of a long position in the Standard & Poor's 500 vis-à-vis the E-mini contract.

Maintain current long position in the E-mini S&P 500 at 2068

Maintain current protective stop below the 200 day moving average at 2050

Trending Markets Forecast

Over the last week and a half we have been looking for an entry point to initiate long positions in the Standard & Poor's 500. Following selling pressure this morning, as traders and analysts began to interpret recent statements made at the conclusion of this month's FOMC meeting, a real rally began to develop.

This presented a real opportunity, and more importantly the proper timing to initiate the position in the Standard & Poor's 500. We did just that, and as you will see on today's video report we are nicely positioned with stops in place.