On The Sidelines
S&Ps were trading down 300 at 1391.50, which is basically fair value. Today brings the FOMC meeting. Everyone is expecting no change, although some are hoping that the bias will be shifted to neutral. We are highly suspect of that.
As is our custom on Fed mornings, we do not participate in any daytrading until after the announcement. If you plan to fight the battle, we view the key on the upside as 1396. If we can hold above this, we have a good chance to make an eventual run to a resistance zone between 1411.50 and 1415.50.
Along the way, over 1400 we have a band of resistance between 1403.50 and 1405.50. If the market gets above 1415.50, the next band of resistance is between 1419 and 1422.50. On the downside, we have light support between 1390-1389. The big area is going to be 1387.50 to 1386. Below this look for 1378. Along the way, 1382 to 1380 will provide some light support.
Underneath 1378, the market has a good chance of going to 1365. Along the way, 1373 to 1370.50 is support. Our Morning Pivot is 1391-1395. Late in the session yesterday financial stocks began to sell off a little bit. Look to see if that continues today. NASDAQ was trading down 10 at 3047.50. Poor earnings from Network Appliance
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PowerRating). The stock is called to open $16 lower. Better-than-expected earnings from Sycamore
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PowerRating); called to open $6 higher.
Yesterday was interesting because we really had a narrow range. We happened to open 115-120 handles higher and ground higher all day.
What was impressive was the close. Many of the stocks settled on the highs of the day, and the index settled only 13 handles from the high of the day. But as for the trade yesterday, there wasn’t much of one, unless you were very bullish. As a group, we were extremely inactive and really feel that the sidelines right now may pose the best view in this market. We’d rather wait for some more decisive areas.
We have resistance between 3079 to 3090. Above that look for a move to 3140. We have resistance between 3135 and 3150.
If the market takes this out, 3225 is the next target, with 3175-3190 as resistance. On the support side, the first key area will be 3025-3015. If we trade lower, they may retrace some of yesterday’s move and most likely down toward 2965. We have light support betweeen 2975 and 2960. Beneath that, we have yesterday’s low of 2942, and under that 2900 would be a logical target with support at 2905 to 2895. If we start trading into Monday’s range, we don’t think it’s bearish. However, it will be bearish if we spend time or settle below 2850. We think if we go down under 2900, the way we trade down there will be the key to whether or not this market rallies into the New Year. We think in the next couple of days it will be very critical how we act here. We anticipate a trade down to this level, but we’re not willing to bet on it.