The December FOMC meeting drew a blank as far as the stock market was concerned as the S&P 500 closed about 3 notches away from where it stood at 2:15ET. Over the last week I've seen a lot of news services talking about when... not if... the Fed will raise rates. It's a joke, people. The hints to this effect coming out of Fed governors are no more than rhetoric aimed at controlling the dollar's decline, and the dollar will get no more support than simple rhetoric for the forseeable future. The banks are still a mess. The employment situation is still a mess. Government policy is still a mess.
Nevertheless, we remain in the midst of a strong countertrend bounce in the buck, and if the nearly 1% pop printing on the DX overnight holds until morning, I expect the SPX to be down more than the 3-4 handles currently indicated by the futures. Equities are simply not going to resist this dollar bounce indefinitely. It seems bulls were the beneficiaries of diplomatic immunity imparted by anticipation surrounding an FOMC meeting and perhaps to some extent by the upcoming options expiry. But the higher the buck moves, the more pressure will build against stocks, and the longer it takes for them to succumb, the sharper will be the break.
Bank stocks continue to hint at coming weakness in the general market.
The fact that our leading sector, gold, has already begun correcting also alludes to an equity correction. In fact, gold should also bottom ahead of the stock market, so keep on your toes as this dollar bounce unfolds.
Well, as you can see, not much has changed since my last post, so unless anything exciting happens tomorrow, you won't see me again until the weekend.