Good morning. Futures are unchanged, we're set to open at sp'1651. Metals are a touch higher, whilst Oil is fractionally higher. The market awaits the FOMC announcement at 2pm, with a Bernanke press conference shortly after. An interesting day awaits!
sp'60min
sp'daily5
Summary
Well, here we go again. Its a fed day, and in this QE supported market, arguably, today is the most important day of the year so far.
What will the fed do ?
I'm guessing...nothing, other than issue a statement of no policy change.
The fed appears to be playing little games with the US markets, and why would they stop now? Release hints of tapering..but never actually do it.
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This afternoons price action could be real choppy, but underlying pressure - especially seen on the daily charts is STRONGLY inclined to the upside.
inv. H/S target zone is sp'1670/75, and that is easily viable by the close of today.
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*I remain on the sidelines, and am trying to resist getting involved on what could be very turbulent afternoon trading.
The market appears rather confident ahead of the next FOMC announcement. The daily charts have seen price momentum swing almost fully back to the bulls. Baring a 'spooky' fed statement/policy change, this market looks set for sp'1700s within the next few weeks.
sp'weekly8 - near term count'2
sp'weekly9 - mid-term count, bullish outlook
Summary
I don't expect anything from the Fed tomorrow that will spook the market. Interest rates aren't going to change, nor is the much touted 'tapering' going to begin. No, it will be surely just be an FOMC statement of nothing.
That certainly doesn't mean the market won't briefly sell lower, but that in itself is again the proverbial 'dip buying opportunity'.
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The two weekly charts above, remain my 'best guess'. The bigger macro-picture is holding together, despite the underlying western-economic weakness out there. The central banks are still managing to paper over the problems, and with bonds largely unattractive, where else is the money going to go?
I do still expect a mid-size wave lower in Aug/September, but that will probably be all the bears get this year...ironically back to the levels of last week.
All things considered, this market looks set to be testing sp'2000 in spring 2014.
Looking ahead
The FOMC announcement is at 2pm, and the Bernanke will be doing a press conference around 2.15/30pm.
We could see some pretty wild price swings, so..for those with trading stops...it could be a very annoying afternoon.
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*I'm sitting the current Fed-affected market out until Thursday morning. Of course, if I'm right, the sp' will be in the 1670s by then, at which point a new long position will be...too late. Besides, opex is this Friday.
Arguably, it is a case of 'come back next week', and just buy on the next minor down cycle.
Goodnight from London
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I noticed this on ZH, it certainly deserves being highlighted here also...
The US equity market closed higher for the second consecutive day, with most indexes climbing almost 1%. Trans and the R2K both support the notion that the market has completed a wave'4, with a fifth to take the market into the sp'1700s this July.
sp'daily5
R2K
Trans
Summary
Another day that the bears will want to forget, although its not like the primary trend is down, so it really shouldn't come as a surprise.
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One thing that comes to mind. How many were shorting into the swift down move yesterday afternoon, and are still holding on the short side?
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If the market gains some relief/confidence from the FOMC tomorrow, then the sp'1670s look a given, the only issue then would be..how soon until we break the Bernanke 'reversal day' high of 1687?
Right now, the 1700s look viable almost within the next week or two, but appear much more likely by mid July.
What is clear..the notion of a near term break <1608....err, no. That just seems so unlikely now. Bears had their chance...and failed.
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