Look for Higher Low
Yesterday the Federal Reserve announced they were not going to raise interest rates in the September meeting. The consensus was very strong that they would raise interest rates by a quarter of a point. Leading up to the meeting I did not expect them to raise rates. The reasons I did not expect them to raise rates were the IMF asked the Federal Reserve not to raise interest rates in 2015, we had weaker than expected retail sales for the month of August, there would be significant volatility if they raised interest rates, and Switzerland issued a 10 year bond below par at a negative yield. We have not had an interest rate hike in almost 9 years. The Federal Reserve said they were going to look at economic data going further. Back when unemployment was above 8% the Federal Reserve said they would start raising interest rates if unemployment got to 6.5%. Unemployment is now at 5.1% and the rates still have not been raised. In yesterday’s minutes the Federal Reserve said they are now looking at China. The market was down today due to a fear of a global economic slowdown. I am 75%-80% certain that the low of 15379 is the low for the year. I am looking for a pullback to a higher low in the 15500-15900 range. I am looking for this pullback to a higher low in the next week to three weeks before the market pushes up into the end of the year.
I am looking for oil to make a higher low in the 39-43 range where I would be looking to buy oil and oil stocks. Twice oil got down into the 43 range but never into my range. Today oil was down about 1.5. We will see what happens but I think it’s a possibility oil gets into my range next week.
Prior to the FOMC release of the September minutes we saw gold rally substantially into the meeting. Today gold is up significantly again, up 15-18. If gold takes out the 1144 level on a daily basis I would be looking for a pullback. The low of 1071 should hold for a while.