Wednesday, being the “big event” from the FOMC, is all about the dollar. The USD has been beaten down relentlessly ever since 2017 began. This is going to be a “make or break” day for the buck, since a strengthening dollar will torpedo gold (and probably help stocks) whereas a new leg in the dollar bear market will probably have just the opposite effect.
Notwithstanding a rally in the Mexican Bolsa IPC Stock Index since it broke above a large, lengthy consolidation zone in mid-2016, only to retest that break at the end of the year, then rise (tepidly) to is current price of 50,265, the momentum and rate of change technical indicators have been flat since January 2013, as shown on the following Monthly chart.
The Weekly chart below also shows renewed weakening momentum and rate of change since the beginning of 2016, in spite of this attempted rally breakout.
Near-term major support sits at 45,000…medium-term at 40,000…and longer-term support at 30,000. These are important levels in the face of a new 7.1 major earthquake that struck today near Mexico City, as reported below (the death toll continues to mount as the day wears on), especially since the rally above its congestion zone has been weak. (more…)
For some reason I’ve been obsessed with this video, perhaps because I moved to California in 1979 and understand the feelings of thinking youth lasts forever. Give it a listen.
This morning, the auto parts retailers opened up strong and reversed down hard, closing their gaps:
The one consistent theme I’m reading about these days……..and I’m certainly inclined to agree with it……..is the puzzlement about the complacency with respect to a forthcoming change in Fed policy. In other words, the “great unwind” of $4.5 trillion in assets the Fed has gorged upon during the past eight years. Tomorrow is the big day, and as I suggested yesterday, things are going to be boring until then (as we collectively observed the changes of a few hundredths of a point across our computer monitors).
Anyway, in an effort to make a silk purse out of a sow’s ear, I offer you the chart below (which, as always, you can click for a bigger version). It offers up a parallel, or analog, if you like, with respect to financial stocks. I’ve got November puts against the XLF. It will be interesting, to say the least, to see what effect the Fed’s big announcement on Wednesday at 2 p.m. has on equities in general and financials in particular.