Pre-Fed Trade
We’re likely to see typical pre-Fed-meeting trade today, which usually means a rally on very light volume. For some reason this market has typically rallied the day before a Fed meeting — but don’t ask me why. The key point in all this is the activity is always on very light volume.
This morning, S&P futures were at 1503, up 200. On the way up, we see 1504.50, 1506.50, a key number at 1508.50, 1511.50 and then a major objective of 1516.50.
On the downside, we have 1500.50, 1498, 1496.50, 1492.50, 1489.50, a major number at 1486.50, and a cluster between 1484 to 1482.
Fair value today is anywhere between 4.76 to 5.27. Our Morning Pivot is between 1498.50 and 1500.
In the NASDAQ market, INTC is called to open $2 higher on an increase in earnings estimates from Lehman. NASDAQ futures were up 10 points at 3845.50. A tough area here for the market. On the bullish side, we continue to trade in the 3800’s. The market, though, is facing stiff resistance going forward.
We see support between 3830 and 3825; beneath that, the key lies between 3810 and 3795. We would consider this to be a pivot zone for today. Under 3795 — especially in light of INTC news — the market could accelerate to the downside. We would look for a move to 3750. Support should be found between 3755 and 3745. We don’t see much downside after that.
Resistance is at 3845 to 3852, then 3875 to 3884. If we get above this, we hit some critical areas at 3905 to 3920. That will take us through Friday’s high at 3890. Above 3900, the odds increase for a trade to 3950.
We would suspect that this move would take place in the final hour of trading. In other words, do not be surprised if the market has had an upside session, and in the final hour, it has a rally based on short-covering and squaring of positions before tomorrow.
Dow continues to trade sideways. This could be the market with the most upside potential on a percentage basis, because if the call comes out amongst trading desks that there will be no interest rate hike, that could spur a rally across the financial sector. The Dow could be a strong beneficiary of that.
No real targets, except looking for 11,400 on Dow cash. We have excellent support at the 10,960-area.