Still A Waiting Game
A tight range in S&P futures this morning between 1470.50 and 1476.50. Clearly, the market is eagerly awaiting the FOMC announcement this afternoon. The expectation is that the Fed will not tighten rates at this meeting. Personally, I have been out of the market since Thursday’s close.
In recapping market activity for the year, I believe S&Ps, technically, have a bullish tone — or at least more bullish than NASDAQ. We’ve had roughly a 70% retracement from the year-low to the year-high.
Typically, the market sees a low around Memorial Day, and then begins to build a “summer rally.” That’s essentially what we’ve been seeing in recent weeks. And, I believe that if the Fed doesn’t tighten, it will not only help S&Ps, but may be the impetus for the NASDAQ to reverse its bearish trend.
I’m also of the belief that if the Fed does not raise rates, the meeting in August may be too late to make a move given the fact that it’s an election year. The Fed and Mr. Greenspan, after all, want to be viewed as “apolitical.”
As we stated this morning, it’s common to have about three fake-outs in the hour to hour-and-a-half after the announcement. The trend will likely assert itself in the final hour of the day. Then stay tuned for the trend to emerge and/or be solidified in the next few days.
In the meantime, it’s still a waiting game…
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