Cross-Market Currents after April 25 Fed Day

Apr 25, 2012: 9:16 PM CST

Wednesday’s Federal Reserve announcement and Press Conference shook the cross-market landscape in a somewhat expected pattern.

Let’s take a look at the intraday ’spiky’ movements and then assess the broader Daily Chart levels in the S&P 500, Oil, Gold, and the US Dollar Index.

Here’s the inter-connected intraday picture:

(Click for full-size image)

We’re seeing a quad-chart view of three “Risk-On” markets (S&P 500, Gold, and Crude Oil futures contracts) and one “Risk-off” market (the US Dollar Index) from a 5-min intraday standpoint.

The highlighted region represents the initial announcement (no change in policy) and through Chairman Bernanke’s press conference.

Despite an initial plunge in gold and a morning gap-fill/sell-off in Crude Oil, these markets were bullish in the aftermath of the policy announcement.

Stocks, Oil, and Gold all rallied sharply during the press conference/interview session.

Despite initial volatility and indecision, the US Dollar index fell sharply to close at the 79 index level.

With this perspective in mind, let’s now take a quick peek at each market’s Daily Chart:

A quick glance at the S&P 500 Daily Chart reveals the two key index areas we’re all watching closely:

  • 1,400 for a breakout buy signal to the upside (and the ‘open air’ above 1,400 to 1,425’s high)
  • 1,360 for a breakdown sell signal to target 1,340 and then perhaps 1,275’s confluence.

In the meantime, price remains ‘trapped’ between the 20 and 50 day EMAs and the broader 1,390 level shy of 1,400.

Gold continues to fight to hold its critical “Make or Break” support:

I posted this weekend about Gold and Silver’s “Make or Break” critical support pattern with positive divergences into $1,620.

So far, Gold has held this level and – even better – formed repeated lower shadow bullish-potential reversal hammer candles off this reference level.

This time, we can clearly see the Daily Divergences into $1,620.

Does this guarantee gold will support and reverse higher from here?  No, but it’s something we’ll be watching as buy triggers could develop quickly.

Otherwise, a breakdown under $1,620 that carries under $1,600’s ’round number’ reference would suggest a continued drop back to $1,550/$1,525.

Finally, Oil still stagnates between its key daily levels:

I’ve been highlighting the critical support shelf near $102.50 and the $100 level which has held so far after February’s spike-rally.

It’s not surprising that we are still watching this level for any sign of breakdown (under $100) which would lead to a potential play for $96 or slightly lower.

Otherwise – like stocks – a breakthrough above the $105 upper resistance level clears oil to enter “Open Air” back to the $108 to $110 area.

These are the quick mid-week updates that build from the running commentary I provide for members of the Weekly Intermarket Report series – feel free to view more information about these detailed reports than I’m able to post in a quick blog update.

It’s easy to get information overload from all the charts that we view which is why I like to pause briefly and reflect on key index areas as short-term or even intermediate term reference levels such as these.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

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Comments
  • Tom Anderson

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