Over the last several years one of the most consistent trades has been to get long stocks ahead of an FOMC meeting. Let’s face it, it just makes the Fed’s decision making process a hell of a lot easier if stocks are rising, and at, or near all time highs.
With Trump unveiling his tax cut package next week I expect the market will be ready for a bounce either naturally, or maybe with a little help from the PPT. So I expect we’re going to be testing the all time highs by May 3rd.
After that we probably have a deeper correction in store by the end of May. So far this correction has lasted long enough, but it hasn’t dropped far enough in my opinion to qualify as a completed intermediate cycle low just yet.
As gold and stocks have been inversely correlated lately, I expect gold to drop down into its daily cycle low during this period. There is likely to be some volatility on Monday following the French elections but once the market settles down stocks should trend up into the FOMC, and gold should trend down into its daily cycle low.
I’m going to cover in detail what I expect from both metals and stocks once these counter trend moves are complete in the weekend report.
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