Waiting For The Fed
We are on the sidelines this morning until the Fed announcement this afternoon. One general note on these announcement days. Typically we have three fake-outs after the announcement, and the direction of the fourth move is the one to go with. If the market has a bullish response, look for S&P futures to make an attempt to trade up to the 1500-1510 area. If it’s bearish, we think they’ll try to the 1442-1438 support zone.
This morning, S&P futures were trading up $1.50 at 1472.50 in a very thin, quiet overnight trade. As for yesterday’s action, while the headline indexes fell, it is worth noting that 57 of the 88 sub-indexes in the S&P 500 rose, and up volume on the NYSE accounted for 57% of the trade. On the other hand, IBM was hit hard, losing over 4% on the session. On the bullish side, cyclicals in general performed quiet well, and they will need to continue this upside surge in order for the overall market to gain strength.
For today’s trade, we see resistance for S&Ps between 1475.50-1478, 1480-1481, 1484.50-1486.50, 1490-1492.50, and then a cluster between 1497.50 and 1501.50. On the downside, we have support between 1467 and 1465, then 1460-1457.50, 1451-1450, and then look for our downside target of 1442-1438. If they break that, support is found between 1429.50 and 1425.
NASDAQ futures were trading this morning up 5 points on very light volume. There was some spurt to the downside as QCOM is called to open $5.50 lower. There is some apprehension after yesterday’s selling; the bulls would have liked to have seen a close above the 3850 area. The fact that we made our high early in the session and then sold off the remainder of the day is never a strong sign.
Also, the semi-conductor index lost over 3% yesterday, and that has been the leader. If the response to the FOMC announcement is bullish, look for 3900, and if they really get ramped up then 3930-3950. Along the way on upside, the key numbers are: a big resistance band between 3765 and 3780, 3830-3841, and then the resistance zone of yesterday of 3855-3865. If they close above this on a half-hourly basis or after the FOMC response, look for the 3950 area.
On the downside, if it’s a bearish response, we’re looking for 3600. Along the way, we have support between 3725-3715, then 3680-3665, 3640-3635, and then under that it should go quickly to 3600.
The Dow continues in our wedge pattern. If we have a bullish response to the FOMC announcement we are targeting a run in the Dow futures to 10,850. If they can close around 10,850, they will successfully have cleared the 30-, 50- and 100-day moving averages.
Along the way, expect resistance at 10,744-10,752. On the downside, a bearish response would target a run to 10,450. There is support seen between 10,470 and 10,410. Any settlement below 10,410 in the futures, should be sold.
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