Wednesday, 31 July 2013

Another Fed day

Wednesday is going to be a particularly interesting day. Not only is there ADP jobs, Q2 GDP, and Chicago PMI data, but there is an FOMC announcement at 2pm. Considering the recent price action/waves, a further 2% of equity upside looks very likely in the immediate term.

 sp'weekly8 - mid term bullish outlook


The weekly candle did actually flip to green earlier today with the break into the 1690s again, but closed blue.

You can see that there is now a very high likelihood of the market seeing some rather classic bearish divergences - seen across a great many indexes, in the coming days.

Whether we max out this week, or next..really doesn't seem to matter. I'm holding to the original outlook, a cycle peak in the low sp'1700s, before a rather swift decline across Aug/September, back into the 1500s.

Copper is still weak

Whilst equities continue their very broad upward climb, Copper is again seeing renewed weakness. Wednesday is the end of the month, and a monthly close <$3 would merit some serious attention.

Copper, monthly

A few consecutive daily closes <$3, and the deflationary doomers can again start to wonder if they weren't right all along. Interesting confirmation might come, if WTIC Oil can similarly close under the important $100 threshold, although that doesn't look likely this week.

The Wednesday trading plan

Many out there (not least Mr 'Permabull' Carboni) generally have a 'no-trade the fed-day' rule. I'm increasingly one of them, not least with the sometimes wild price gyrations in the immediate hour after an FOMC announcement.

Right now, I'd only feel 'marginally comfortable' shorting the indexes from the sp'1705/10 level. I'd really have no concerns from the 1720s, but that seems out of range tomorrow.

Perhaps...the market will complete the current sub'5 later this week...on the Friday jobs data? it is, I don't really expect to be shorting the main indexes tomorrow, certainly not <1700. After all, if there is one thing the bears should have learnt in the past four years, when it comes to shorting the QE-fuelled market..there really isn't any need to hurry.

*Ohh, and as for what the Fed might do tomorrow, baring a complete end to the QE-pomo program, this market will surely battle broadly higher into spring 2014, if not a couple of years beyond that. That is indeed...not the best of thoughts to end the day.

Goodnight from London