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The Fed’s Creating Another Bloodbath Below the Surface…

May 4, 2022  |  Steven Place
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Deep Dark Market Conspiracy Revealed, click here to learn more
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Markets are seeing a small bounce after looking like absolute death last week:

Chart with Price Levels

Chart with Price Levels

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:

USD Futures Chart

USD Futures Chart

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:

USD/JPY Chart

USD/JPY Chart

And the Euro:

EUR/USD Chart

EUR/USD Chart

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:

MOO Chart

MOO Chart

And here is XME, which is an ETF that has miners and steel names:

XME Chart

XME Chart

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:

>>>This video presentation will show you how it works in more detail.<<<

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.

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