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How Capital Markets Will React to FOMC News

Stocks in this article: TLT GLD XLE DIA QQQ SPY

Continue to trade the gold market just like a stock using SPDR Gold Trust (GLD) ($126.50). The ETF is below its 50-day SMA at $129.14 with the 200-day SMA at $143.62. The weekly chart is negative with the five-week MMA at $129.81 and the 200-week SMA at $143.36. My monthly value level is $118.35 with a weekly risky level is $135.75.

Continue to trade crude oil using the Energy Select Sector SPDR Fund (XLE) ($84.31) The EFT traded to a new multi-year high at $84.66 on Monday. The 50-day and 200-day SMAs are supports at $82.41 and $78.61. The weekly chart is positive but overbought with the five-week MMA at $82.75 and the 200-week SMA at $68.78. My weekly value level is $81.68 with monthly and semiannual risky levels at $87.91 and $88.35.

For the major equity averages the Russell 2000 tested a new all-time high at 1066.39 at Tuesday's close. The Nasdaq set a new multi-year high at 3756.24 on Monday staying shy of my semiannual risky level at 3759. The other three major averages stayed below their all-time highs at 15,658.43 for the Dow Industrial Average, set on Aug. 2, 1709.67 for the S&P 500 set on Aug. 2 and 6686.86 Dow transportation average set on Aug. 1.

It seems highly likely that all five major averages will power to new highs given a positive reaction to the Fed statement and to comments by Ben Bernanke at his press conference this afternoon.

If the Nasdaq has a weekly close above 3759 the upside is to my semiannual risky levels at 16,490 Dow Industrial Average, 1743.5 on the S&P 500, 7104 Dow transports and 1089.43 on the Russell 2000. As I have said before, if you cannot confirm cycle highs, new highs will likely follow.

SPDR Dow Jones Industrial Avg ETF Fund (DIA) ($155.29) is above its 50-day SMA at $152.68 with the 200-day SMA at $145.42 with the Aug. 2 high at $156.24. The weekly chart shifts to positive with a weekly close above the five-week MMA at $152.22. My weekly value level is $149.35 with monthly and semiannual risky levels at $163.25 and $164.06.

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