Wednesday, August 1, 2012

Fed Day

I wasn't far off with my prediction yesterday (an overnight gap up and than more 'blood'). Although blood is definitely an overstatement.

After the gap up, price immediately pulled back to yesterday's low and bounced there (for Dow and S&P that is, tech and small caps where lagging again today). The market bounced, but then a long sideways consolidation followed in anticipation of the Fed interest rate decision and the policy statement. The initial reaction was a quick sell-off, followed by a decent bounce.

So originally a nice bounce, but the first reaction is often the right one and prices started dropping again towards the close. No new lows for the major indices except for small caps, they got slaughtered in the last 15 minutes...

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Euro, oil, metals
The euro was hit the hardest on the Fed policy statement. It didn't recover as much as indices did on the bounce and later on, it just kept going down. The euro is now closing in again on the 1.22-level.
Metals were down and lagging all day, silver was down 2%, copper 1.9% and gold lost 0.8%.
Oil rebounded well from yesterday's big losses and was up 0.8%.

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