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Fed Policy Statement at 2 PM ET

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The Dow gained 22-points yesterday but the broader indices experienced modest losses as we head into today's FOMC policy statement. The last two trading days have been the lightest trading volume days of the year as investors are on hold. Some weaker than expected retail sales data set the tone for the day early on but the bears were not able to hold the opening losses as dip buyers jumped in.

Daily TSP Funds Return

Oil was down again but for a second day in a row the prices rose well off of the morning lows by the close.

Look for a policy statement from the Fed at about 2 PM ET today. Until then all bets, and probably analysis, are off.

The S&P 500 (C-Fund) traded on very light volume yesterday ahead of today's Fed meeting. There is some sticky resistance in the current area where the 200-day SMA, the longer-term descending resistance line, and the bottom of a rising wedge are all converging. The Fed has the ability to push stocks above the resistance or send the S&P back down from that resistance. Whatever happens, the action will be emotional and the initial reaction may not be easy to trust. Remember that stocks sold off initially on the ECB rate decision only to see stocks bounce back strongly during the following days.

The small caps (Dow Completion Index / S-fund) look to have broken below a rising wedge pattern and the support line from the bottom of a trading channel. But it also may be forming a bullish flag (blue). The 50-day EMA would be about where the bull flag would try to find some support.

The price of crude oil broke down from its trading channel. The logical initial target of a pullback would be the 50-day EMA.

The EFA (EAFE Index / I-fund) remains in a large rising trading channel but still trades below the 200-day EMA.

The AGG (Bonds / F-fund) remains in a pennant formation that may be waiting for the fed before deciding which way to break out. The formation is bullish for bonds suggesting the Fed could be sending bond prices higher, but you never know what they might have up their sleeves.

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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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  1. amoeba's Avatar
    I've been watching that volume too!!! What a free lunch, and still serving; I tried to tell everybody before it happened on the short-term strategy forum. Markets are going even higher from here.

S&P 500 (C Fund)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)