Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

US Fed is Driving Equity Prices and Volatility

US Fed is Driving Equity Prices and Volatility

Last week’s news that the US Fed will raise rates from 0.75% to 1.00% drove the US markets, generally, over 0.40% higher after Fed Chairman Janet Yellen announced the hike.  As of right now, the NASDAQ has pushed to a new all-time high and the SPY is very close to an all-time high.
 
Yet, as we move into the end of March 2017 and begin the spring season, we have to be aware of the risks that are before us.  OIL has recently seen a downward price break based on over supply, yet is up today on the Fed news.  Gold and Silver are up nearly 2% today.  The US Dollar is down nearly 0.75%.
 
How are we supposed to read all of these price variances as a trend or direction for trading signals?
 
Generally, on a day like today where the US Fed is driving the move, we can’t read into these signals clearly just yet. We can foresee a few things though.  The Precious Metals are reacting to the fear side of the Fed move and the potential for a market pullback/correction.  The US Dollar is reacting to the Fed news by pricing in an equity rotation from certain income sectors into others as well as the fact that the US Fed is now leading the race in terms of Central Banking Normalization.  Of course, the EUR and GBP are pushing higher while the US Dollar retracts a bit.

MarketProfile Table

What does this mean for equities?  A quick look a the market profile of the general market shows us the following :
 
– Technology, Basic Materials, Healthcare, Industrial Goods, Utilities & Consumer Goods are strong
– Financials are underperforming (overall)
– Certain specific sectors (Discount Stores, Auto Parts Manufacturers & Department Stores) are underperforming (overall)
 
Remember though, this is but a single day’s price move in relation to the other 280 (roughly) trading days a year.

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