Futures are flat this morning, but this comes on the heels of a 206-pt rally since ES tagged the 2.24 Fib extension at 2728 on Jun 3.  We’re used to seeing markets ramp higher before FOMC decisions.  When the Fed disappoints, the ramp provides a bigger buffer for the subsequent fall.  When the Fed delivers, it provides an easier point from which to break out.

We’ll find out in a few hours which we’re facing today.  But, it seems to me that Trump dashed any hopes of an imminent rate cut when he announced yesterday that trade negotiations have taken a positive turn.

With nominal employment looking strong and coincident economic indicators whispering but not yet screaming “recession” we might get a less dovish statement than many observers are expecting. And, does the Fed really want to give in to the latest tantrum from the White House?  I’ve raised four children, and I can tell you this is almost always a really bad idea.

Regardless of the FOMC’s decision, rates should continue to drop.  TNX made a new intraday low on Monday, and the charts indicate it’s still not done. Both it and the 2Y have broken trend.  If the past is any indication, the 2Y will drop faster than the 10Y and the spread will blow out — which is bearish for stocks.In any case, many of our factors are indicating lower equity prices lie ahead.

continued for members…

The setup for SPX, ES and DJIA:

COMP — in the clear again or just another head fake?And, a peek at a bearish DJIA scenario:

VIX’s breakdown — either signaling new highs for stocks or a pretty good head fake. Oil and gas still appear likely to tag our next downside targets later today.  Will they bounce or fall through support?

And, currencies are still going sideways — a situation that could continue for two more months. More later…

UPDATE:  2:20 PM

No rate change for this meeting, a slightly increased chance of a cut for September based on the dot plot.So far, things are moving as expected.  The DXY and USDJPY are falling… …and despite an initial bump, SPX is slumping a bit. But, VIX is helping prop things up.  As long as it’s dropping, bears are not out of the woods.TNX is dropping again…GLTA