Can we BUY on Thursday? | SchoolOfTrade Newsletter 10/08/14

·       Markets began the session with sluggish price-action but then reacted strongly to the ‘FOMC Meeting Minutes’ released mid-afternoon

·       Fundamental: Gold continues to hold above $1,200/oz. today and we can point the finger at the FOMC Meeting Minutes and the ‘dovish’ wording of the report.  It is very clear that the Fed is worried about the strength of our US-dollar (which makes our exports too expensive) and is going to keep rates very low for the foreseeable future because they are concerned that raising rates will hurt the economies overseas and the strong dollar is weighing down our exports around the world.  For this reason we are holding tight above $1200 and we will continue to watch the market-sentiment the rest of the week.

·       Fundamental:  The scenario keeps getting worse for the price of Crude Oil, while the ‘soccer moms’ around the world rejoice with $87/barrel Crude Oil prices today!  A strong US-dollar, global economic slowdown, warm weather and now today we see a shocking build of Crude Oil Inventories from our EIA report at 10:30am EST.  Inventories are building while the demand is shrinking for the ‘black gold’ and that will likely continue pushing prices lower until OPEC and other producers start cutting production this winter, which may become more urgent that they originally thought.

·       Fundamental:  “When bad news is really good news.”  We had the biggest 1-day rally of the year today in US equities, and the reason for this has nothing to do with GOOD news, but the reality that rates are going to stay low for at least the majority of 2015 which means the ‘easy money’ will keep flooding the stock market in the US.  With the ‘easy money’ available in the US traders and investors saw an easy buying opportunity today and they took it!