Chillin’ Like a Villain on Penicillin

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We have an interesting situation in front of the Fed announcement today. Is this a sell the rumor, buy the news type of day? Alternatively, is this simply the big money assuming we will inevitably go down anyway, so they are out selling ahead everyone else? Either way, we are soundly down 1% across all major indices and sectors. Volume is unimpressive, while breadth is weak.

I am not going to make any moves before the announcement. Actually, right after the announcement I will probably wait at least several minutes before doing anything as well, given the historical whipsaws on Fed days. As you can see on an up to the minute daily chart of the $SPY, the two main scenarios I see are either a bearish rising wedge, which would presumably resolve sharply lower. This scenario would break the pattern of higher highs and higher lows since July 1st. The other scenario would be a bullish resolution out of the apex of the multi month triangle we have been forming.

Keep in mind that seven of the last ten trading sessions have closed in the red. Despite that fact, the bears have made no technical damage thus far to the bullish uptrend of the last six weeks. If the bears cannot successfully take us down here, then I believe we will finally see a major breakout to the upside.

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