The SPY found support on at the Oct 2nd reaction low with relatively minor bullish divergences in place on this 60 minute chart. As of now, the bearish case & near-term downtrend in the US equity markets remains solidly intact despite this post-FOMC minutes driven rally. The release of FOMC minutes often causes sharp market reactions which are more often than not reversed shortly thereafter. As has been widely expected, the Fed has begun to “jawbone” down the $USD in today’s release of the FOMC minutes and the impact on commodities & the mining stocks has been very direct & impulsive so far with GDX blasting above this 60 minute downtrend line in addition to the late Dec 2013 previous lows. While it is probably best to let the dust settle before making any major changes to positioning today, everything I see still points to the dual-theme that I’m positioning for into year-end & likely well into 2015: Equities down, commodities up.

Quite a corner the Fed has boxed themselves into here: Let the dollar keep soaring and the economy will eventually start to suffer from the effects of a strong dollar –or-  Put the brakes on the dollar & commodities will start to rise, thereby rearing the ugly head of inflation, which of course, will force their hand in raising rates… (which will also stifle economic growth).