FOMC Day: Oct 29, 2014

I could make all sorts of arguments for why the “market” should be moving lower.  But, the reality is that prices are still being driven by Fed/ECB/BOJ easing, promises of easing, and hints of easing.

Although QE3 is officially over, just the hint of additional easing by Bullard the Blinker were enough to drive a panic rally that has barely retraced any of its move higher.  Note the complete lack of respect at .618 and .786 Fib lines.  The .618 was exceeded by 6 points before ushering in a backtest of the SMA20.  The .786 saw a retrace of a whopping .97 points.

2014-10-29 SPX 5 0600The SMA20 backtest did flesh out a well-formed channel which broke down Monday — only to see prices rise higher still.

2014-10-29 SPX 60 0600Since then, 10 year notes have moved sideways, as have USDJPY and USD.  And, VIX has been relentlessly pounded into submission.  If we get any kind of sell off today, I suspect it will be to the SMA100 at 1962 or SMA50 at 1967.  Remember, in the past, these FOMC day sell-offs have lasted a matter of minutes and are treacherous to trade.

If those levels should fail to hold, the .618 at 1943 might serve as a target.  Otherwise, lots of resistance was broken yesterday, and the trend higher has to be considered to be intact.  The .886 is up ahead at 1996.62

Good luck to all.




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