Light trading in front of FOMC meeting
by
, 04-26-2016 at 01:06 AM (1391 Views)
Stocks opened lower on Monday and saw some stiff losses throughout the morning. The bulls stepped up and there was some afternoon buying with a late spike higher as the Dow ended the day with a 27-point loss, erasing most of the nearly 150-point loss it had earlier.
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Volume was very light as it was the S&P 500's second lowest trading volume day of the year. That is because the Federal Reserve will present its policy statement after Wednesday's FOMC meeting. The Fed has been very reluctant to do or say anything about the market or the economy since the sell-off after their December rate hike. I suspect the action will be timid again today, although whenever I say that I'm surprised by something, but I'll keep my analysis to a minimum until after the FOMC meeting unless something unexpected happens today.
Apple reports after the bell today and that could be a market mover, but the pending FOMC meeting tomorrow is the main focus.
The S&P 500 (C-Fund) fell below the rising wedge formation (blue dashed) after failing at the old highs. It remains in a rising trading channel with 2075 being the closest support area.
The weekly chart shows a possible peak forming here so watch that latest kangaroo tail for resistance.
The EFA (EAFE Index / I-fund) slipped deeper into that first open gap. The 200-day EMA is the next level of support and the question is whether that can hold or if the other two open gaps will draw it down.
China is on the bearish watch list as long as it is trading below the rising wedge formation and the 50-day EMA.
Oil is in a bearish rising wedge so the top of the wedge (~45) and the 200-day EMA (~42) are key areas to watch above and below the current levels.
The AGG (Bonds / F-fund) continues to pullback and looks like it wants to test the rising support line next. The Fed could determine which way this breaks. A more dovish outlook could send it to new highs, but any hint of renewed rate hike talks could see it break down.
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Tom Crowley
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