Finally, the day we’ve all been waiting for. Will they or won’t they? Who knows? But, it’s pretty clear, from watching the talking heads over the past few days, what the script is: bring on the taper, but paint it as a non-event because the economy is strong enough to take it.
We can argue about whether the economy really is that strong, and whether inflation is an issue. But, there’s little argument that today’s decision will impact the markets. My expectation? Whether they taper or not, TPTB are standing by with buckets of cash to buy any dips that appear.
If you’re a bull, I wouldn’t worry so much about an immediate sell-off (though stops are always a good idea), but I would be concerned about what the market does after the cash infusion spike — especially if SPX tags 1823.
Tomorrow’s a big POMO day. But, there’s more to worry about than just tomorrow. As always, I’ll trade where the market is going, not where it should go.
US equity markets are relatively quiet this morning, settling a bit after fleshing out a triangle as expected.
The USDJPY is retreating after hitting channel resistance in this post new-high week.
While, the dollar looks like it could break either way — probably sinking, then soaring.
Yesterday, VIX tried to break out of the white channel but fell back in line.
UPDATE: 1:53 PM
Should get the announcement in a few minutes… Do or die time. Some targets in either direction…
The close-up:
continued for members…
The aftermath…as of 2:37PM
An update, and close-up as of 2:51 PM:
ES broke out of the falling red channel, tagged the .786, and will probably tag the .886 at 1799.50 after back-testing the channel.
UPDATE: 3:16 PM
ES just tagged the .886 at 1800.75 — only 5 points from the previous high. A little stop running, anyone?
It’s interesting to note the 1.272 extension of the pink pattern at 1741.17 lines up nicely with the H&S Pattern’s target, the grey .886 and the purple .382 and white 1.272.
If the previous top at 1805.75 isn’t broken, this would make a nice next target. Note that the yellow and red H&S Patterns both have the same slope. The red one targets 1700, which is the scene of a number of Fib levels not to mention a nice round number.
It’s also 10 points lower than the current 100-day moving average — a typical downside target for many of the market’s previous swoons. Here it is on the daily chart.
Note that the H&S (shown below in yellow) hasn’t busted thanks to the neckline slope. Even a new high on ES wouldn’t necessarily bust the pattern. Not saying it’ll happen, but a stop-busting high for the day, followed by a wicked H&S Pattern: U-G-L-Y.
