Morning all, today is the big Fed day with the news out at 7pm but more importantly Ben Bernanke’s press conference at 7:30pm. Maybe the future of QE will be mentioned and everyone will know where they stand rather than the flip flopping about on the will they won’t they shambles. I imagine that they will keep it as is for the moment and they won’t be tapering. QE Unlimited was sold to everyone with the aim of reducing US unemployment below 6.5%, we aren’t there yet and unless they lied about its reason for being then it should remain as is.
Generally for today I am thinking up down then up again pattern for today. Yesterday was a trifle weird, Draghi’s comments not helping my short by making them just after I entered – typical! That saw the FTSE get a bit of a turbo boost on ended up nearly hitting the 6400. However the drop at the end of the day looked a little suspicious so I expect that we will see an initial rise this morning. We are in the slightly interesting situation where the price is above the 20 day Bianca channel which is pretty rare, suggesting a little overbought. The top of the 10 day Bianca channel is not far away at 6387, however, the Raff channels also look like they might be coming into play shortly, the 20 day that was at 6420 yesterday has moved down to 6390 and the 10 day is at 6430 – also where the 25ema is on the daily. Basically we are nearing some longer term resistance levels.
Asia Overnight from Bloomberg
Asian stocks rose as Japanese exporters rallied after the nation’s shipments increased and the yen weakened ahead of the conclusion of a Federal Reserve policy meeting. The MSCI Asia Pacific Index rose 0.4 percent to 132.29 as 12:33 p.m. in Tokyo, paring gains of as much as 1 percent. About the same number of shares rose as fell on the gauge. More than $2 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”
“The markets has been fretting over what the FOMC meeting will come out with,” Martin Lakos, division director at Macquarie Private Wealth in Sydney, told Bloomberg Television. “There’s absolutely no explicit indication at all of a change in monetary policy by the Fed until we see the unemployment rate go down to 6.5 percent. We clearly see what the Japanese government is putting in place to get the economy going.”
Futures on the S&P 500 Index slid 0.2 percent today. The gauge climbed 0.8 percent yesterday to its highest level this month as investors awaited the outcome of the Fed meeting for clues on the central bank’s plan for stimulus.
“As there was market turmoil on concern about tapering in the U.S., I think the Fed is going to try to bring some calm,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-biggest lender.
As mentioned above I expect today will be an up, down then up again day. Today’s pivot is 6360 which has held as support overnight and while I have been writing this email we have already added 15 points, to nearly test the 10 day Bianca channel at 6387. However 6415 is the main area that I am looking for a rise too, before falling back, possibly as far as 6346, if the 60 pivot level breaks. Its going to be a pretty choppy day and another tricky one to trade with the Fed meeting. While I am thinking about it, this Friday is a quadruple witching day with option expiry so will be really choppy mid-morning too. As you can probably tell this week is a hard one to trade and in all fairness probably a good one to take off and come back next week! For the S&P I am thinking its going to test the 1660 level before dropping back, whether the FTSE can get to the 6415 at the same time the S&P hits that we shall see, but from there a drop back to 1648, which is previous support and its daily pivot, before climbing again to 1680. Stay nimble today, keep the stops close trading off these levels and let’s see what Ben says later on.
Just to confirm, my planned trades are:
- Possible early long at 6370, if we dip from 6387 (where we are at time of writing)
- Short 6415, target 6361 (though might dip to 6348)
- Long 6348 (bulls must hold 6327 though if we do dip), target 6478 (might take till tomorrow to hit that level but depends on Fed – not change to QE could see it hit tonight)
stop of about 20 points on both