FOMC Minutes Push Market Higher
Today at 2:00pm the Federal Reserve released the minutes from their September meeting and boy did the market like what they had to say. My interpretation is that they are never raising interest rates. The market ended up closing around 130 points, getting the DOW above the 17050 level. In the last 5 business days the market has rallied well over 1000 points. I stated I was looking for a pullback in the 15500-15900 range and we got down to 15949. Right now the S&P futures are more than 51 points away from the 10 bar moving average. Anything above 30 is significant. We have an extreme overbought condition and if you had purchased stocks a couple weeks earlier at lower levels I would be looking to sell into this. I do think we will get a pullback. I will go on record that I am 100% certain that the low of 15379 is it for the year. I am raising my target for a pullback to make a higher low in the 15700-16200 range. We may not get this pullback as the market only has a couple more months before the end of the year and they are going to do everything they can to erase the loss of the year. Even if we do get a pullback I believe it will be short lived as we still have the November and December FOMC meetings and I believe the language will remain the same.
Back when unemployment was well over 8% the Federal Reserve said they would be looking to start to raise interest rates once unemployment got down to the 6.5% level. In the last meeting they said more economic data is required. The IMF had asked them not to raise rates in 2015 and they are looking more into what is happening in China. Today they said that once inflation gets above the 2% level then they will start to raise interest rates. As I have been saying since January I do not believe they will raise rates in 2015.
The market still has about 800 points to go before it gets back to where it opened in January. As I stated I believe at year end the market will either be down very slightly or up single digits on the year. With what has happened recently I am leaning towards the market being up single digits by the end of the year.
Despite the oil inventory number yesterday oil was up well over 1.75 today. The key number for oil is the 48.15-48.18 range on the weekly charts. If oil closes above this range on a weekly basis I will have a buy signal on oil on the weekly charts that would mirror the daily charts. I would then be looking for a pullback in the 44-46 range before oil can push up past 52-53. Tomorrow the weekly bar will close and let’s see if it can close above the 48.15-48.18 range.
When the minutes were released gold spiked up right through 1150. When the dollar started to gain a bid and pushup gold immediately sold off and was down 10 at one point. When I walked in this morning gold was down 10 trading around 1135. I stated that I am very bearish on gold even with the fact that the Federal Reserve will not raise interest rates. Gold should have stayed above the 1150 if not trading higher but it sold off because the dollar gained strength. If gold gets above the 1155-1175 range I would be looking to sell any gold and any gold stocks.