Markets are seeing a small bounce after looking like absolute death last week:
And the S&P 500 found support right where we expected it to on our Market Primer.
The market is completely focused on the results of today’s Fed meeting.
A 50 bps hike is all but guaranteed... and then another one in June... and another in July... and another in September.
We haven't seen Fed policy this hawkish since December 2018.
And yet — while equities have traded like trash, there's another bloodbath under the surface:
This is a weekly chart of dollar futures, which shows us how the USD trades against a basket of things like the Euro, Yen, and Pound.
And this is a monster move to the upside.
When you break it out further, it looks worse with the Yen:
And the Euro:
The other central banks just can't keep up with Federal Reserve policy, so we’re seeing some massive moves in currency markets.
These kinds of cascades signal that multiple macro trades have broken over the past few weeks.
But if you look at dollar futures, it's clear we’re at a place that’s served as an inflection point in the past.
It's quite possible — in the face of a negative GDP figure and deteriorating consumer sentiment — that the Fed tweaks its language so the dollar move doesn't break other economies.
The dollar’s strength also broke the commodity trade. Here's a chart of MOO, which shows us stocks in the Ag sector:
And here is XME, which is an ETF that has miners and steel names:
So here's the setup...
If the dollar rally becomes a "sell the news" event, it's high odds we see commodity names start the second leg of a run.
In fact, we just added two new clever commodities plays to our Precision Volume Alerts portfolio.
One just fell to a prior resistance level — now potentially serving as an area for buyers to swoop in — that’s also a key Volume Weighted Average Price from previous lows.
The other is hitting critical support that aligns with another key level on our Roadmap.
Speaking of that Roadmap:
Plus, in that video, you’ll learn how to join PVA and grab both commodities tickers within our portfolio. Make sure you watch it now.