6/25T2:22 Fed story

Fed Story: Just as we expected...

If you read the previous blog covering our expectations of the Fed announcement, you will see that the story today was just as we had outlined in the blog. There are no surprises here. So now the question is: How should we react?

Answer:

-Step one: Cover the hedge on our gold and silver positions. The expectations that the Fed will be raising rates is going to dissipate and that in conjunction with the ECB's desire to raise rates now should put a cap on the US$ and in fact send it lower. This will be good for all commodities.
-Step two: Use the ensuing rally to set up short positions. The Fed is now neutral and out of the picture for the moment. The market will swing with the data. What we should be able to do is use the charts with minimal interference from Fed manipulation for the time being. The daily charts on all three major indices are in the red zone so we need to short when the 60 min. gives the signal. Watch Out! The daily charts are way over sold and could lead to a rally that lasts for more than a couple of days. The thoughts above need to be executed over the comming weeks not days. Go slow!
- Step three: Use weakness in the markets to buy oil stocks. After we set up short positions and get the sell off we should use the weakness to buy energy names because commodities and in particular oil will rally on the back of a renewed weak US$