Today played out like most Fed days in the 10 year bull market. A market rally on cue post the 2pm EST announcement. It’s as if stocks are giving the Fed a Standing O for their wisdom. Today was significant as most domestic indices/sectors joined the foreigners move last week making new 2019 highs just about across the board. It was like the Standing O burst into a chorus of “We Are The World!”

 One asset class I have failed to mention recently is the High Yield Bond market. Junk bonds act more like stocks and often have a way of leading equities to the upside and downside, akin to Semi’s. The move off the Xmas low for junk has been nothing short of impressive, they are within a whisker of making an ALL TIME HIGH! We are not in a Bear Market as some pundits, especially the perma type, have been espousing. This is from a guy who likes Bear Markets.

I wrote about open field running for the Emerging Markets this weekend and there is no doubt JNK, a large ETF for the space, will enter rarified air in February. I am remiss as I should have added this chart to the Bullish side of the ledger in my ramblings a couple of weeks ago. Those are some very big bars! Again little doubt in my mind stocks will follow suit.

Another asset class that apparently did not like the Fed’s commentary and decision was the US Dollar. It dropped nearly 1% after the announcement and appears to be headed lower. I showed this chart a few weeks ago as it tends have a significant influence with Emerging Markets and Precious Metals ($ down them up). It is difficult to see on the weekly chart, but the currency has also formed a Bearish Head & Shoulders Pattern on the dailies. The red line is the neckline. Look out below.

We have another semi-gov’t event Friday when the all important employment #s are announced in the AM. It also tends to be a market mover and falls on the 1st trading day of the month which is often one of the best. So there may be some more big bars for stocks in the near future as the breakouts leave their base behind.

Remember we are only still at the November lows where stocks should have bottomed sans the Hedge Fund Crowded Theater Theory. This could get perpendicular?

Final Thought –
“The sooner you admit you’re wrong the sooner the relevant info shows up” – Not a Perma Bear 

More later,
Max Power

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