The TSX60 was weaker after the rate decision.
We can see below that even though the US$ did not move, gold weakened. (This is also linked to Trump stating that the military option is not his priority in NK.)
We can see below that defensive US sectors also experienced strong selling yesterday. It is clear that large investors do not want to be holding the bag when US rates are increased.
XLF is still very negative, while XLE experienced an oversold bounce.
Note below that the XLK MF is more negative than the NQ8 MF, although price wise they look similar. This points to liquidity being concentrated in only a few stocks.
Small caps are still neutral.
Finally, we can see that the 20DMF and the Cumulative Tick show a negative divergence. This is partly due to the selling in the SPY/QQQ ETFs as index investors are also leaving the markets.
Conclusions:
Safe haven assets are being sold while index investors are also reducing positions. This is not positive going forward.
The second surprise might be President Trump backtracking on most of his promises:
- Obamacare was not repealed
- Relations with Russia did not improve
- Trump is no closer than Obama to solving the NK situation
- Trump now wants a fast/short-term debt ceiling removal, contrary to what he said earlier
If you put aside curse language and widespread bullying of other countries, Trump's policy looks very much like the continuation of Obama's policy.
I believe that the market will now start focusing on the QE unwinding decision that must take place by September 20.
