Thursday -- The Day After

S&P E-mini Futures:
Down hard, yet a bit sloppy.

Markets:
Asia and Europe red. Rough action, sharply lower.

Reality sunk in that that was no Dovish Hike. That was a whole lotta detail about draining $50 billion per month from the punchbowl.

Hearing and seeing "policy error" getting thrown around suddenly. A little late perhaps.

Policy error started back in 2008 with the bailouts and continued as the Fed attempted to "paper over" a debt problem with endless liquidity.

Debt can only be fixed by less debt.

So now we have the Fed, the BoE, BoJ, and ECB openly discussing balance sheet reduction and stimulus removal. Whether it's for real or just jawboning is not yet clear. But the liquidity pump may be slowing, and markets will need to sink or swim.

Mood:
Probably belongs here in Mood even though it's FX:

81% Euro bulls per the Daily Sentiment Index means very few dollar bulls, and it shows.

FX:
USD shot straight up after the Fed decision, statement, and press conference, all of which erased the Dovish Hike fantasy.

Widespread dollar strength continues against all majors.

Treasuries:
Yield curve (2s vs 10s) flattened considerably, along with 2s vs 30s. If it continues, things could get bumpy.

Energy:
WTI crude possibly gunning for its May swing low (43.76) but could turn at any time. NG showing a bit more grit, up slightly.

Metals:
Red and messy.

S&P Outlook:
E-mini futures have come off hard from yesterday's double top, but they haven't broken last Friday's swing point.

That level is 2412.50.

On the NQ it's 5643.25.

The S&P cash has a pattern which suggests higher prices may still be possible unless 2419.97 fails.

If it does, the gap at 2411.80 may become the next target.

The Dow laughed in my face yesterday, laughing off Janet & Co. as well, and closing close to its highs.

I may be wrong about it being the weak link, and will watch it carefully as a leading indicator. It could hold the clue to equities as a whole if it continues to hold up.