Today was a very interesting day and just so happened to be my most profitable day of 2010! I was flat at one o’clock everything except for a little gold and long usd/jpy. I assumed the Fed would keep rates at the current low rate since nothing suggests a thought of a hike to me. It was very interesting action when the announcement came. I was watching the market, but not keeping up with the news and saw the ES shoot up around the time of the announcement. Unlike previous fed announcements however, the decision was not unanimous which could bring about some speculation and add fuel to the rocket ship that is the US dollar.
I hope everyone else had a good fed day! USD/JPY broke out which is good, I never sold the remaining AUD/CAD lastnight and it didn’t hit my stop either so I am still long one third there. I am predicting further decline in the markets. I am looking for at least a thousand S&P since that is what I follow.
This chart shows the es low in march of 675.5 and the market went up while the dollar declines, which shows no US economy belief like the talking heads wanted you to believe. But nonetheless the dollar did go down during this time. I marked the first vertical purple line where the dollar index turned positive while the es went sideways and shot up following the dollar. This is fascinating since the dollar and the US markets are usually negatively correlated. I see further upside in the dollar and a fall for the US markets, will be looking to short the es around 1110 if it can make it there. My other prediction is that gold will go up with the dollar. At the end of 2009 we saw the long gold short dollar trade come off which was pretty interesting. Now I think we will see long gold, long dollar, short oil, short US markets trade for a while. That is my perspective on things at the moment. Also, this is the year of natural gas; but I heard that Cramer liked it on mad money so perhaps I need to do further analysis on that one, lol!