Alarms are going off on multiple charts this morning, the day one of the most consequential Fed meetings in years kicks off.
The topic on everyone’s mind, the one we’ve been warning about for the last six months, is inflation. But, if you believe Jay Powell, it’s not even something the Fed’s thinking about thinking about. Just look at the bond market – nothing to worry about, right?
Wrong. The Fed says what they need to say in order to justify the massive stimulus being thrown at markets – said stimulus being sufficient (so far, at least) to keep interest rates from keeping pace with spiking inflation. Now, the Fed’s starting to sound just plain ignorant.
Not that the crowds are always right, but the growing chorus of inflation warnings is becoming harder to ignore. Will the Fed really push its luck and let inflation break out?
At this point, all algos seem to care about is rising oil/gas prices and falling volatility. That’s about to change. 
continued for members…
The big picture:
CL is still very overbought – a condition which has always resulted in a correction even when inflation isn’t out of control.
The DXY is gathering steam as EURUSD continues slumping and USDJPY has yet to make much headway.
Gold and silver have been suppressed for nearly a year. If the Fed continues to shovel excess liquidity into the system, we could see the next leg up get under way. GC has backtested the SMA200 and purple channel .236 line.
And, SI continues to backtest the white channel midline.
And, BTC is flirting with a bullish 10/20 cross again.
Bonds are the canaries in the coal mine. Are they ready to sound the alarm? The charts say a backtest of the red TL and channel midline is coming, but what about after that?
I’m on the road today, but will be updating charts later today and tomorrow.
GLTA.