The indexes are sitting just beneath resistance, hanging around in no-man’s land. Both the SPY and the COMP are still beneath the 20 day moving average. Short-term, they are more overbought than oversold, but are in a neutral area when looking out over the past month. Both MACD and Stochastics could crossover to the upside, or reverse back without crossing over.
The setup here is precarious for both longs and shorts. The temptation will be to place bets after the Fed’s announcement, but in my opinion, that will be premature. There is still some significant, market-moving economic data to be released at the end of this week. Likely, even after the Fed announcement, the indexes will still be trading beneath resistance. I feel strongly that it will be best to stay on the sidelines until Monday, using the weekend to research and develop a list of plays.
Unless the Fed is unequivocally bullish and cuts .50bps, my suspicion is that the markets will sell-off.
The other possible wild card is the ADP Employment Report, due out tomorrow morning at 8:15 a.m. Eastern Time.
No matter what happens this week, after bottoming, markets typically do not re-gain significant upside momentum until they re-take their 50 day moving averages. The charts show that junction to be a long ways off.
Markets are a turd fest for the foreseeable future.
It’s weird to watch this crowd lining up long or short to game tomorrow’s high-risk event, apparently hell-bent on risking their trading capital to win a toaster.
Waiting a few days not only lets the technically ungameable econo-news come out, but also allows the big kids time, post-Fed, to jerk things up and down a few times to separate the pipsqueaks from their lunch money.
Only the PPT can fuck things up. The chart rules. I’m staying in cash until we are overbought. Than you very much for the chart!