It will be a critical day for the bears. Those who have been touting wave'1...and then'2, they are clearly now seeking the start of wave'3. Are we about to see the FOMC disappoint the market, with a lack of action?
sp' weekly, scenarios
Summary
I'm highlighting the scenario chart again, since we really are at a very important junction. Scenario C' of course did not occur...so that leaves us with continued gains 'A'...or we'll put in a lower high 'B', rollover, break sp'1266..and down we go - forming wave'3 (or C?).
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The Battle Plan for Fed day
I plan to continue to wait to re-short..until I'm clear on what the FOMC have decided. I will have trade/s ready to hit though after 12.30pm.
1. If NO action of any kind...I'll short the market.
2. If QE-twist extended - but no net added funds...I short
3. If QE3 - of ANY kind is annouced...I will hold back for a further day or so..to re-assess.
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My best guess?
High confidence - NO QE3
Mid-confidence - QE-twist might be extended, but it will only be minor
Low-confidence - QE-twist, but major 350/500bn balance sheet expansion/new funds in some form
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*FOMC decision on interest rates, QE, 12.30pm
Bernanke, press conference, live on clown networks. 2.15pm
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Wednesday will be critically important, and will shape the direction of the market for the next few months. Good wishes for those who plan to trade tomorrow, whether bullish..or bearish!
Goodnight from the rehypothicated capital of the world (aka... London)