OptionPundit

Tag: FOMC Announcement

  • An Interesting Wednesday

    So far, past two days’ rally effort appears to reinforce that this is more of a 2-5 days technical rebound that occurs post a 90% Down Day (Friday’s sell-off). Today, Dow is rallying over 100 points and other indices are not too far behind.  It remains to be seen if, post FOMC announcement, markets can sustain these levels.

    There is apparent lack of volume over this week’s two sessions which is well below the sell-off volume on Friday, another indication suggesting that distribution days are increasing. All the major market indices dipped below, then kissed and are now bouncing above the 50days EMA. The short term resistance levels were at approximately 1060 for the S&P 500, 2080 for the NASDAQ Comp, and 580 for RUT. Only Dow has managed to hold above its short-term uptrend support of 50Days EMA.

    Uncle Ben hardly has many choices to please markets to run north on steroid, post announcement. He will be keeping interest rates unchanged and market participants know that. How he views future will be evaluated critically. If he is keeping rates low again too far in the foreseeable future, the economy is still in poor shape. If he hints raising rates, markets won’t like it either. Bottomline, I personally have a bearish bias. Hope this is not one of those “Buy in anticipation and sell on News” days.

    But in the end, there is always “what if”, what if markets rallies. Based on my past experience with FOMC announcements, markets tend to be very volatile during that moment. Pls trade very carefully during pre-n-post announcements and be very careful not to make decisions in haste. If you can’t avoid trading during that time, better, develop a “what if” risk management plan in advance so your actions are driven by a pre-planned game-plan vs emotion.

    Profitable Trading, OP

  • Futures are Pointing Higer Opening

    There are a lot of positive news in the market, for a change. Some of the companies have announced good results. FDIC starting a “bad bank” concept and FOMC meeting announcement at 2:15pm. There is nothing much fed is left with from the interest rates perspective, but Uncle Ben may have some more tricks.

    Y’day volume was thin, and internals were ok. I would consider action so far as bouncing from the oversold region. But I am ready for any “new development” as well. The markets need to clear upper edge of the minor resistance which appears to have formed over the last few days. For the DJIA, the upper edge of the resistance is near 8250, while the equivalent level is near 855 for the S&P 500 and 1515 for the NASDAQ. A move above these levels may be viewed as a breakout but volume is the key. So watch out for the volumes together with any move to avoid any bull traps.

    So far we have hatrick on earnings (2 shared as bonus trades in speculative section, 1 shared as Income portfolio) for OPNewsletter (AXP, BTU and GD). So far so good, we have invested nearly 20% of capital and have cash available for more opportunities.

    Trade carefully and as much possible, delay decision of going long at least by one day.

    Cheers and profitable Trading, OP