The Pre-FOMC Rally — Will The Pattern Continue?
After spending the early morning figuring out my trading strategy for the day, I threw out all the technicals and looked at the last eight sessions before the FOMC meeting and measured the results. What this study told me was be prepared to get long this morning, but the real velocity usually comes in the final 30-45 minutes of the session.
As I walked into the pit, ready for a day of trading, I thought I was one hour early. The pit was 2/3 full, and on the open, there was absolutely no dealer interest. The biggest bid or offer from a dealer I’ve seen this morning was 100 contracts. Simply put, it seems nobody is very interested in trading right now.
What does this mean going forward? Well, my target this morning was 1509.50-1510.50, and I still think we’ll get there. After that, 1518 becomes the biggest target, but I don’t think this is feasible until the final 30 minutes of trading. So what I am telling people, including myself today, is keep the positions small and with a bullish bias for the morning. In the afternoon expect short covering and some velocity in movement to the upside. But bear in mind this will all be done on light volume. If the downside appears, below 1505-1503 we should trade 1498. If this does not hold, look for 1491.