Dudley Duds Stocks

August 17, 2016

The US S&P 500 index pulled back from yet further record highs after New York Fed president William Dudley dropped the latest piece of central bank rhetoric via the Fox Business Network.

Dudley was at his best, telling markets that the Fed could potentially raise interest rates as soon as next month, while at the same time telling us that the growth prospects and its effect on stubbornly low inflation don’t actually yet warrant a move.

“We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further.”

Dudley was then asked whether the September FOMC meeting was live:

“I think it’s possible.”

Ah central bankers. Masters of making nothing sound like something…

Nothing to see here folks, move along now.

S&P 500 Weekly:
Click on chart to see a larger view.

But in saying that, you can always find sense in the clarity of a strongly trending chart, and that’s exactly what we have on the S&P 500 weekly.

Just setting the scene, after having broken out from swing highs, the SP500 hasn’t looked back.

S&P 500 4 Hourlyy:
Click on chart to see a larger view.

The intra-day level that we’ve been watching on the @VantageFX Twitter is the key short term level for a market that still doesn’t look like wanting to take a break anytime soon.

Rhetoric out of the Fed such as the above isn’t going to change that fact either. As Forex traders, make sure you aren’t sucked too deeply into the headline hype that is sweeping financial media today.

Moving across to Forex markets and the British Pound was the standout performer overnight. With better then expected inflation data caused by a low GBP, ironically we saw the currency spike higher.

“GBP CPI y/y: 0.6% v 0.5% expected.”

After having fallen for 9 consecutive daily candles following the Bank of England’s decision to slash interest rates and re-introduce its dormant stimulus program, just under half the fall was retraced in one fell swoop.

GBP/USD 4 Hourly:
Click on chart to see a larger view.Click on chart to see a larger view.

Following the Brexit drop to record lows, finding levels to manage our risk around on Cable has been tough. As readers of this blog know, even as a day trader you should be identifying longer term levels and then zooming into intra-day charts from there for lower risk entries. But if the levels aren’t there, then they just aren’t there!

But within the vacuum of nothingness below the GFC lows, markets have created the above level. And low and behold, price tags it following the CPI release and we get our first pause.

Mark your levels and trade your levels!


On the Calendar Wednesday:

GBP Average Earnings Index 3m/y
GBP Claimant Count Change

USD Crude Oil Inventories
USD FOMC Member Bullard Speaks
USD FOMC Meeting Minutes

Trade Forex with Australian Forex Broker, Vantage FX.

Dane Williams – @VantageFX

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