Markets Up, Tomorrow’s FOMC Meeting, Gold hits $1280

Good news for the market today as we broke the resistance of 1131 on the S&P 500 and finished the day up 17 points at 1143. There were a few analysts who were saying it was Obama’s town hall meeting that allowed the market to break through the resistance but I really don’t buy that at all. In any case, I think it’s safe to say that I’m finally convinced of the equity rally so far this month considering in the last three months we had hit a triple top last week in the major indices and also some of the broader ones as well. Regardless of what happens tomorrow and in the future, we have broken the former trend. I’m not certain as to how to markets are going to finish the month let alone the year, but it does seem like Wall Street has settled in and isn’t concerned about disinflation anymore, which brings me to the FOMC meeting tomorrow.

I think that bonds the precious metals sector will yet again be the leading effects of the Fed Chairman’s statements while equities have found their own place in the market unattached to those other sectors. Well really guys, this is it I think. We’re so close to pre- Greece debt crisis levels right now- that was supposed to be our breakout but an overly debted nation followed by and entire summer of correcting prices in the gold and silver market have kept us in a menial trading range. Tomorrow’s FOMC meeting, if uneventful and similar statements to previous meetings are made, gold and silver WILL NOT pullback again this year. Silver will hit $21 an ounce and gold will easily pass $1300. I suspect that oil, which has been lagging commodities, may even rise.

This is the last news based hurdle we need to beat, we’ve got the technicals on our side, we’re up well over 10% in the last month and there’s nothing short of “disinflation” concerns that can stop us. My advice for traders and investors is absolutely be sure to have cash on hand tomorrow in case Bernanke does say he is concerned about growth and does not announce any additional QE. If that’s the case be patient and be ready to increase positions as prices fall. On the other hand, you could set a stop order above where the current price is trading before Bernanke speaks in order to get a favorable buy without being left in the dust and/or paying too much for your shares.

On that note, I’ll leave you with Rick Santelli questioning Obama at the Town Hall meeting, while Obama plays with the answer. Also, another clip from CNBC that aired today that I would have liked to share but couldn’t find was about a certain guest on there who said was holding gold but only as another forex play, and that inflation is not a concern. Well I agree that gold looks more and more like a currency, frankly it’s foolish to say that inflation isn’t a concern when gold prices are high. The Fed continues to announce QE, the government borrows tons of money during recessions, and while that doesn’t always effect prices now, it most certainly will later, which is why I still view gold as undervalued, even at $1280.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

3 Responses to Markets Up, Tomorrow’s FOMC Meeting, Gold hits $1280

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  3. aaronbasile says:

    Thanks for the comments guys. FOMC Meeting results are out, I’ll write about it after the closing bell.

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