equity markets spiked higher after the Fed said in its minutes that it may have
to act â€śsoonâ€ť rather than â€śbefore longâ€ť.
This put a sense of urgency on the situation triggering a sharp breakout
to the upside on the intraday charts.
Upside momentum dried up shortly after last
weekâ€™s December E-mini S&P 500 was crossed by .75. This indicates that
there were no buy stops over last weekâ€™s high and that investors arenâ€™t
interested in buying strength this far up from the recent low.
The move to 1165.75 may have attracted
sellers, but this doesnâ€™t mean the trend is in danger of changing to down. A
lower close today will be a sign of weakness however.
December Gold had a volatile afternoon
session after the Fed Minutes were released. The initial surge was to the
upside, but this move failed to attract strong attention from the bulls.
Technically this Gold contract is sitting
at $1345.80 which is close to 50% of the range following last weekâ€™s closing
price reversal top. Bullish trader may
be getting nervous since the market has sat inside a range for the past three
days. This could create panic selling if the market begins to weaken.
The EUR USD is trading higher, bouncing
back after a sharp decline earlier in the session. The rally in the Euro is in
reaction to the news that the Fed is getting ready to move quickly in applying
This afternoonâ€™s Fed Minutes said that
several Federal Reserve officials thought that it would â€śsoonâ€ť be appropriate
for a second round of quantitative easing (QE2) to boost the economy.
The major change in the Fed language since
the release of the Federal Open Market Committee statement on September 21 was
changing the phrase â€śbefore longâ€ť to the word â€śsoonâ€ť.
Although no price tag was put on the QE2
package, alluding to a time period was considered to be bad for the Dollar.
Two issues that the Fed seemed to be
concerned about were how to communicate any new stimulus to the public and the
steps to lift inflation expectations.
Fed officials also discussed specific ways
to target inflation, target a path for the price level rather than the rate of
inflation and target a path for the level of gross domestic product without an
No forecasts were prepared for this
meeting, but the FOMC did trim their growth estimates for 2010 and 2011.
Technically, the Euro was on its way down
and nowhere near any key support levels when it turned around. This indicates
that todayâ€™s short-covering rally was news driven. A trade through 1.4028 will
reaffirm the uptrend.