The Chinese equity market fell a touch overnight. The offshore dollar/yuan fell a touch to another new low for the year. Gold in yuan fell over a percent.

Elsewhere in Asia, Hong Kong rose 2 percent. Japanese equities fell a touch. JGB yields fell 1 bp to 1.59%. The dol/yen traded down to a new low for the week and then reversed to the upside post-FOMC to end a third of a percent.

European equity markets hung around on either side of the unchanged mark by less than half a percent this morning. German 10yr yields fell 1 bp to 2.69%. The eur/dol traded up to a new 52-week high and then reversed post-FOMC to end down half a percent.

Over in the US, the equity futures were flat ahead of the open. The dollar was mixed vs. other colored paper. Gold was off a few bucks, and yields were higher.

The S&Ps opened flat and slowly drifted lower while we waited for “Fed time.”

Finally, at exactly 2:00 ET, the FOMC statement hit the tape, and just as everyone expected there was a 25 bp cut, and the dot plot indicated 2 more cuts between now and year-end, just as everyone currently expects. Some lunatic (probably the new guy from the White House) indicated 5 cuts between now and year-end.

As for the reaction, the S&Ps initially popped to the upside by a touch. The dollar index slumped back to its July 1st low. Gold popped over $2700 to a new all-timer, and yields fell. Five minutes later, everything began to reverse.

The S&Ps slumped to a new low for the day. The dollar reversed and began to rally. Gold plunged into negative territory, and yields began to rise, especially in the long end.

PowPow then did his song and dance, and I don’t think he said anything all that unusual. He repeated that the Fed was data dependent and not any preset course, just like always.

The S&Ps finally hit a low with about an hour to go and then began to bounce as PowPow began to wind up his presser.

For the close, the S&Ps would manage to recover back to near the unchanged mark where they had opened to end with a loss of just a hair. So, basically much ado about nothing at least where the spoos are concerned.

Volume was chunky. Breadth was barely positive on NYSE and barely negative on the NASDAQ. New highs swamped new lows on the NYSE (157 to 26), and new highs swamped new lows on the NASDAQ (352 to 58).

Stocks Were Mixed:

Stocks were mixed, and the only pattern I noticed was that the rate sensitive names were on the heavy side.

Speaking of which, the XHB homebuilding ETF fell percent, and BLDR fell over 5 percent. So far we are seeing exactly what we expected, with mortgage rates rising despite the Fed easing, which is not what the mob wanted to see. As you will see below, I increased my shorts in BLDR and XHB after the FOMC today.

Positions: I made no changes to my shorts in SPY, QQQ, MDY, IWM, ARKK, but I increased XHB and BLDR by 30%.

Commodities Were Lower:

Brent crude fell a percent. Natural gas fell over a percent. The oil stocks were lower, with the oil and gas ETFs all losing over a percent. The uranium equities were higher, with the URNM recovering a percent from yesterday’s dump.

Copper was off 2 percent even before the FOMC hit. Other base metals slipped too, with the DBB base metals ETF losing over a percent. The copper stocks were lower too, with the COPX losing over a percent. The steel stocks were also lower, with the SLX losing a percent. The XME metals and mining ETF fell half a percent.

Palladium fell 2 percent again. Platinum fell over 2 percent and broke out to the downside from its compression triangle on the charts. Like copper and silver, platinum was pounded overnight well before the FOMC.

Silver plunged over 2 percent overnight to a new low for the week and finally found support at the bottom of little channel it was in back in early September. A bounce then began, and the metal would recover back up to the 5 dma during the US session to cut its loss to just a percent.

When the FOMC statement hit, the metal popped to just over the 5 dma and then quickly reversed and then plunged back to the overnight lows and even exceeded them slightly before bouncing into the equity close to end down over 2 percent.

The silver/gold ratio fell over a percent and looks to be headed back to the 50 dma.

The CCI equal-weighted commodity index ETF (GCC) fell over a percent. The energy-heavy DBC commodity ETF also fell over a percent. The Bloomberg Commodity Index (DJP) fell nearly 2 percent.

Gold Popped Over $2700 And Then Reversed Convincingly:

Spot gold trade down about 30 bucks overnight to as low as $3660 for no particular reason (like all the other metals) and then began to firm into the US open.

Once the US session began the metal recovered back up to barely negative territory around $3685 and chopped sideways while we waited for the FOMC.

Once the FOMC statement hit the tape, the metal initially squirted higher and made a new all-timer by 4 bucks to as high as $3707 as the dollar plunged. However, as the dollar then stopped going down after testing its July 1st low, the yellow metal then reversed and plunged to a new low for the day and to as low as $3645 before firming into the equity close to go out off the lows at $3659 for a loss of nearly a percent.

That close also put spot below the 5 dma for the first time since late August, just like we saw with the GDX yesterday.

Gold Stocks Slipped Again:

The GDX gapped down to a new low for the week and then began to rebound with the metals. After filling the opening gap and cutting its loss to about half a percent, the GDX then chopped sideways until the FOMC. Once the FOMC hit the tape, the GDX popped with gold and moved into slightly positive territory and tagged the 5 dma. Like gold, the GDX then reversed and plunged to a new low for the day. A bounce appeared in the final hour, but the GDX still went out with a loss of half a percent to a new low for the week. Volume also picked up and was even chunkier than yesterday.

The GDX/GLD ratio bounced a touch.

The silver stocks were hit even harder than the gold names again. The SIL fell a percent and a half. The SILJ also fell over a percent and a half, and the GDXJ fell over a percent.

Real yields were higher, and nominal yields were higher too. The yield curve steepened a little per the 2/10 spread. The dollar plunged on the FOMC statement but then recovered to end higher on the day, and the yellow metal clearly reacted to movement in forex. However, it’s worth noting that gold was also down in all the major foreign currencies too.

I was worried we might see something like this when we began the week, although I was hopeful for a meltup after yesterday’s small pullback. However, the overnight beating that gold and silver took made a meltup a far lesser probability and greatly increased the odds of a mid-month top and a “sell the news” reaction to the FOMC today.

Obviously, things could change wildly overnight (as they did last night), but in light of the way we closed today, I’m leaning towards a correction beginning. And because we have been going basically straight up since late August, it could be a nasty one.

Again, the trend is still up in my view, but a scary correction is more than warranted. And in light of the action, it’s now starting to happen.

As you will see below, I reversed my positioning post-FOMC and even put out some shorts on the post-FOMC pop.

Barring some sort of wild upside reversal overnight as the dollar plunges again, I suspect we’ll see the metals make new lows for the week and then we’ll have to see what happens. I’m not a big fan of “support” levels, because levels are meaningless when selling starts and only known in hindsight.

My gold model remained on a Tier 1 SELL, and even more concerning is that the HGNSI actually rose after already being in nosebleed territory.

Positions: I bought some SLV 39 calls on the open for 12 cents but then sold them for 16 right after the FOMC statement hit. I also dumped my 39.5s for 8 cents and took a 7 cent loss. I then bought SLV 37 puts for Friday for 7 cents, and I shorted Dec gold at 3722, Dec silver at 42.40, and GDX at 69.70. As I noted at the time in my Intraday Comment, these are trades and bets on a correction. I could cover them at any time, including overnight in the case of the metals.

As always, I post all of these trades as Intraday Comments for subscribers in real time.

The Dollar Plunged But Then Rebounded:

The dollar tanked vs other colored paper but then reversed to end higher. The dollar index plunged back to the July 1st low and even exceeded it slightly before reversing to the upside and ending on the highs with a gain of over a third of a percent. Perhaps we’re going to get that wild bounce before the DXY takes out lows after all????

"The" BTC ETF (IBIT) fell over a percent. MSTR, COIN, RIOT and other BTC derivatives were mixed.

Positions: Long IBIT (last add was to double the position on April 4th at 47.03).

Treasury Yields Rose:

Treasury yields rose 6 bps in the long end, which left the 10yr yield at 4.09% and a new high for the week.

The 2/10 spread widened a little.

Yields in the Fed sensitive 2yr rose 4 bps to 3.55%. Junk debt slipped, with the HYG losing a touch. LQD, which is the investment grade corp bond ETF, also fell a touch. MUB, the muni ETF, fell a freckle.

To Sum Things Up:

So far, we seem to be getting a classic “sell the news” reaction in the metals in light of exactly what everyone expected occurring at the FOMC. Corrections are usually swift and bloody, so be careful out there.

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Intraday Comments will continue to be posted every day during market hours, including the "Morning Note" before the open with all the usual sentiment measures and ETF changes from the prior day, as well as all of my trades in real time during the trading day. Mailbag posts and important news items will also continue to be posted just like always. Basically, if you value real-time analysis and trade changes, like occurred today, then Intraday Comments are for you. Feel free to email support with any questions.

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