Post Fed Day Foibles and Quad Market Price Action

Dec 19, 2016: 2:43 PM CST

As we begin the new week, let’s reflect on how markets have predictably moved AFTER last week’s expected Fed Interest Rate hike.

Let’s view our quick Quad-Market Money Flow Grid:

First, let’s state the obvious:  markets widely expected the Fed to boost interest rates 0.25% which is what happened.

Higher interest rates inherently are…

BULLISH for the US Dollar Index

BEARISH for Treasury/Bond Prices (thus BULLISH for Treasury Yields)

Generally speaking, higher interest rates are net negative/bearish for stock prices but that’s not a direct effect.

Nevertheless, we did see a stellar collapse in Treasury Prices (bottom left) along with a similarly large rally in the US Dollar Index (bottom right).

Gold – recently serving as a “Risk-OFF” or safety market – similarly collapsed (top right).

Stocks bounced around but have been retracing lower immediately after the Fed announcement.

If we pull the perspective of last week back to the hourly charts and trends above – as we do for Intermarket Members – we can see the following crystal clear trends in Money Flow:

SUPER BULLISH for Stocks and the US Dollar Index but BEARISH for Treasury prices and Gold.

If you’re a short-term swing or intraday trader, focus on these movements and compare what’s happening with price – moving with these trends or against it – as we trade into 2017.

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Corey Rosenbloom, CMT

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