Fed rate hike no big deal, or is it?

Besides recommending good trades to you, the most important lesson I can convey to you as part of this service, as part of becoming a better trader and investor, overall, is this:

Simply ignore all the pundits out there who make such a big deal of central bank or government actions, or any other fundamental data for that matter … and instead, listen to what the markets themselves tell you.

The markets tell you everything you need to know, and doing mental gymnastics over what some official says or does, or how some so-called “expert” interprets news or any kind of fundamental data for that matter …

Is nothing but a complete waste of time and more importantly, will cost you more money than you can ever make using such analysis.

For in the end, interpreting fundamental events, news or data is nearly 100% subjective. And subjective opinions offer you no more profit potential than going to the casino and guessing which cards, which colors or numbers on a roulette table, which slot machine, or whatever, will come your way.

In our Tuesday webinar, for instance, I told you I was 100% confident the Fed would raise interest rates. How did I know? Simple, the markets themselves had already discounted it for the past several weeks, and in some cases, for the past few months.

You could see it in the strength of the dollar. You could see it in the weakness in the euro. You could see it in the weakness in precious metals. You could see it in the nervousness in the stock markets.

You could see all these things and more in the charts of these markets, and in the trading action – the language of price.

You needed nothing else to figure it out. Just experience as a trader and a chartist.

I also told you on Tuesday that it would be no big deal if the Fed raised rates because the markets already expected it. And so it was. No big deal in the market action yesterday.

And I also told you that all those pundits out there would start immediately performing mental gymnastics trying to figure out the future course of Fed interest rate policy by reading and interpreting the Fed press release that followed the rate hike.

And so that was, for as I learned from colleagues this morning, just minutes after the Fed press release was published yesterday, everyone was talking about the Fed’s use of the word “gradual” versus its previous wording of “measured” when referring to possible future interest rate increases.

How freaking silly! Such analysts are totally clueless about how economies and markets work.

In fact, if I did a poll of all the talking heads on CNBC and Bloomberg, I bet we would find that less than 10% of such analysts have ever even traded the markets.

This is why I never listen to or watch any business shows, whatsoever. Even yesterday, on the occasion of what everyone was saying was the most important Fed meeting in a decade, I didn’t listen to or watch CNBC or Bloomberg or anything else for that matter. Nor did I read anyone’s analysis.

In fact, I went to bed early. I got up at 1:30 am my time, just before the Fed announcement and then I just checked the markets.

As the Fed rate hike came out at 2:00 am my time, I checked the markets again – realized, without reading or hearing anything – that the Fed did exactly what I expected, just by checking the market action …

And, I then went right back to bed.

I am not bragging about anything. I am simply telling you that the markets will always tell you themselves what is going on, what the trends are, and more.

All you have to do is listen to them, not the pundits out there. As you become more proficient at doing so … you will see your success as a trader and investor improve. Dramatically.

Of course, I will help you. Education and imparting my experience with the markets is also a part of this service. For without it, I would be doing you a disservice, no matter how much money I help you make over the coming months and years.

Enough of my pontificating for today. Let’s now turn our attention to the markets and the messages they gave us over the last few days.

I’ll start with the overall message the action is telling us.

As noted above, the Fed rate hike was expected. And from a longer-term point of view, it means nothing more than what we already know which is that the U.S. economy is in better shape than Europe’s and Japan’s. The Fed rate hike does not change that.

But here is what the Fed rate hike does do. As you all know, my cycles in virtually all markets had pointed – on their own – to December 15/16 as an inflection point where something would happen.

That inflection has now been reached and the results are also precisely as I laid out for you in Tuesday’s webinar. To reiterate, it now appears that …

A. The dollar, after taking a pullback and pause, is ready start rallying again.

B. Conversely, the euro is ready to start sliding again.

C. Precious metals remain weak and should be pressured lower by the stronger dollar.

Indeed, the December 15/16 cycle high for the metals seems to have come right on cue, with gold reaching as high as $1,077.90 yesterday (February futures contract) before sliding as much as $14. Silver reaching $14.31 on the 15th, before sliding back to $14.00.

D. Oil remains weak at the knees, and entering a cyclical period where it could rally a tad, but then fall again into early January. And …

E. The stock market, as also noted in my Tuesday webinar, is running out of time to pullback, yet remains overall weak and could easily plummet into year-end or the first of the new year.

Importantly, and also as I noted on the webinar, we need to be patient now and not overtrade. For two reasons:

First, the cyclical set up for the markets now shows some seesawing action between now and the first of the year, which means it would be all too easy to lose money. Supercycle Trader is up 31.1 percent year-to-date and to jeopardize those gains with uncertain trades would be foolish.

Second, through the holidays and the end of the year, trading volume and liquidity are simply going to decline further, making it again, all too easy to lose money.

So my message right now is this: Be patient. There will be no new trades in the coming days unless I see a truly major opportunity where the potential reward vastly outweighs the risk.

I know that’s not what some of you want to hear. But if you want to become a winner in the markets, you need to know that there are basically three positions to have in the market: Long, short, or on the sidelines.

Being on the sidelines is equally important to knowing when to be long or short.

Now, let’s look at the current open positions:

– Gold: As you can see from this chart, overall gold is weak. It rallied on cue with the short-term cycles into December 15/16 – but did not elect any important buy signals … and is now sliding again.

A close below the downward sloped dashed blue line will help to drive gold into a new low heading into early January.

Hold your shares in DZZ with a good till cancelled protective sell stop at $6.53.

If not on board DZZ, wait for my next signals in gold.

– Euro: As noted previously, and at Tuesday’s webinar, the euro’s recent rally, while unexpected, was weak.

And just like many other markets, yesterday, the euro appears to have started its next leg down, simultaneous to the Fed rate hike. The chart I have here is the same chart I showed you just recently, updated for yesterday’s action.

Notice how the euro followed the red dashed arrow lines I had drawn in previously and is now on schedule to move lower into year-end. That decline could easily pick up momentum.

Bottom line: Hold your shares in the ProShares UltraShort Euro (EUO) and/or the ProShares UltraShort Euro February 2016 calls, strike price $28.00 (EUO160219C00028000) and the ProShares UltraShort Euro January 2017 calls, strike price $28.00 (EUO170120C00028000).

If not on board the above, you may purchase the ProShares UltraShort Euro January 2017 calls, strike price $28.00 (EUO170120C00028000) at the market, using no more than 2% of your trading funds.

For EUO and the ProShares UltraShort Euro February 2016 calls, strike price $28.00 (EUO160219C00028000), please wait for my next signals.

– Stock market: As noted during the webinar on Tuesday, time is running out on the stock market as far as a sharp pullback is concerned. However, as also noted during the webinar, that does NOT mean the stock market will not pullback.