QE3 set to be officially terminated

Barring some bizarre change of plan, the US Federal Reserve look set to terminate QE3 tomorrow. The market has not 'gone it alone' in a full two years. The mere psychological loss of Fed support, will be a problem for Mr Market, at least to some degree.


sp'monthly8 - QE phases

Summary

So... another day for the equity bulls, with a daily close of sp'1985. Frankly, even I'm surprised. I thought my upside target for the mid 1900s - stated two weeks ago, was bold, but here we are... just 1.7% from breaking the 'Alibaba top' of 2019.


The weekly charts offer a mixed picture.

sp'weekly

I suppose it could be argued we are back testing the old broken support/trend, but still.. this is one mighty strong bounce.. if it could even be called that anymore.


Not waving the white flag... quite yet

Despite a move above my own 'last line' of the sp'1970s... there is still a moderate chance we'll see a major wave lower in November.

However, with each daily close >1970... it becomes less probable. The fact the Transports broke a new historic high this morning, makes a test of the 1820 low that bit more unlikely.
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Looking ahead

Wednesday will of course be all about the FOMC. The announcement is due at 2pm. There will NOT be a Yellen press conference. Market is expecting the termination of QE3, along with a press release stating 'rates will remain low'.

*Next QE is.... well, at least not until spring 2015
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A busy Wednesday is ahead

Today sure felt like bearish capitulation, as those who are already short were short-stopped in the 1970s. But what about Fed day?

I'll strongly consider an index-short tomorrow, after the 2pm announcement, but it will depend on price action. Personally, I want to see a minor initial spike on the upside, something on the order of 3-6pts, whether that is to sp'1980, 85, or 90s. A retrace of some kind... perhaps to the 1920/00 zone seems viable. Hopes of sub 1900... are pretty faded right now.

Finally, I want to say thanks to those that do say hello during the trading day... its always good to hear from some of you, bearish or otherwise ;)

One of these days the market will blow up.... when it happens.. I'll be there...



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Goodnight from London

Daily Index Cycle update

US equities continued to climb, sp +23pts @ 1985. The two leaders - Trans/R2K, settled higher by 1.5% and 2.8% respectively. Near term outlook is for a reversal after the next FOMC announcement, but downside increasingly looks limited to 1920/00 zone.


sp'daily5

Trans

Summary

*most notable aspect of today, and perhaps of the entire 9 day rally... the Transports broke a new historic high.
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So... the broader market continues to rally... and with a new historic high for the Tranny, it bodes well for the bulls.

Even if the market reverses from the FOMC tomorrow afternoon, there would seem more likelihood of flooring in the low 1900s.. than of breaking through it. For many.. not least yours truly... it is not the most pleasing of thoughts.

As ever though... one day at a time.
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Closing update from Riley



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a little more later...

Volatility breaks new cycle lows

With equities breaking new cycle highs, the VIX was naturally on the slide, melting lower across much of the day, settling -9.5% @ 14.52. Near term outlook offers a floor in the 14/13s, before the next opportunity of a move to at least challenge the key 20 threshold.


VIX'daily3

Summary

Little to add.

VIX has been cut in half since the spike high of 31.06. In the next wave higher, the 18/22 zone looks a viable target.

When will we next see the 30s... that is the great unknown. Considering the power of the ongoing equity up wave, it is increasingly (if not depressingly) doubtful that we'll test that spike high for some considerable time.
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more later... on the indexes