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Fed meeting today

XAG/USD – Daily Candlesticks
Source: GKFX / MT4 (January 27, 2021)

Silver is currently testing $25 as support after an earlier breakout from the level as resistance morphed into a rising wedge pattern, which tends to be bearish at the end of an uptrend. A downward reversal would need a break below $22 to confirm. 
 

TAKEAWAYS


•    Stocks close flat before key Apple and Tesla earnings reports
•    GameStop (GME) stock flew above $240 afterhours Tuesday after Elon Musk tweet
•    Other ‘most shorted’ stocks pop again including Blackberry
•    Microsoft tops profit and revenue expectations in Q1 report
•    US dollar dips ahead of Fed rate decision, Powell press conference
•    Oil rebounds after surprise US inventories draw
•    Only 5 Republicans approve Trump Senate impeachment trial
•    DAY AHEAD: Apple, Tesla earnings, US durable goods, Fed meeting
 

GURU WISDOM


 “I have not failed. I’ve just found 10,000 ways that won’t work.” - Thomas Edison
 

MARKETS


*Daily closing price
↗ EUR/USD    1.2162        (+0.20%)
↗ GBP/USD    1.3737        (+0.46%)
↘ USD/JPY    103.63        (-0.10%)
↘ S&P 500    3849.62    (-0.15%)
↘ Hang Seng    29,391.26    (-2.55%)
↘ Gold        1850.83    (-0.22%)
↘ Oil (Brent)    55.81        (-0.13%)
↗ Bitcoin    32,796        (+1.64%)
 

NEWS

GameStop


GME stock is now up over 500% in a week thanks to massive options call buying from users on the Reddit forum r/wallstreetbets and others. The stock closed up 92% on Tuesday. Traders are taking advantage of a feedback loop whereby dealers who sell the call options to the traders have to buy the underlying stock as a hedge, forcing the stock higher and adding to bullish bets. The process is known as a ‘gamma squeeze’ and adds to the ‘short squeeze’ we detailed yesterday. A single tweet from Tesla CEO Elon Musk saying ‘Gamestonk!!’ sent the stock flying again after cash markets had closed. Stonks is a joke term for stocks on Reddit.
 

Popular shorts


Other stocks with high short interest including AMC Entertainment, Blackberry and Express gained on Tuesday. AMC is up 120% year-to-date despite having diluted its shares with new issues to raise capital to deal with its faltering cinema business. 
 

Fed Preview


New fiscal stimulus efforts mean the Fed is able to keep its powder dry at today’s meeting despite the economic recovery slowing since the last meeting in December. There are calls in some quarters for the Fed to reign in (taper) its bond-buying to stop unintended side effects (see above!). Any mention of tapering is dollar-positive. However, with inflation falling away from the 2% target, this seems unlikely just yet. The dollar has stabilised in the run-up to the meeting and could choose its next direction soon after.
 

Earnings


AMD and Microsoft both blew through Q4 earnings expectations in reports released Tuesday, setting up the expected record quarter for Apple today. Tesla has beaten estimates for the past 6 quarters in the lead up to today’s announcement. 
 

DAY AHEAD 


*Times in GMT
00:30 – Australia Consumer Price Index (YoY)(Q4) [0.7 % Exp vs. 0.7 % Prev]
13:30 – US Durable Goods Orders(Dec) [    0.9 % Exp vs. 1 % Prev]
19:00 - Fed Interest Rate Decision [0.25 % Exp vs. 0.25 % Prev]
19:00 - FOMC Press Conference

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