As we all wait to see what magical solution the FOMC can come up with to attack both growing inflation and stagnation, the futures are up modestly on the usual USDJPY/NKD ramp.continued for members…

CL is drifting lower, perhaps to find support before the next ramp.While, SPX has a shot at backtesting the broken white channel (2085ish) before TSHTF.  Alternatively, the SMA5 200 is at 2082.75.  Given CL and USDJPY drifting lower here at the opening, it looks pretty iffy. This is the best idea I could come up with yesterday.  But, remember, most FOMC announcement days result in a steady meltup as the result of USDJPY and/or CL ramping.  So, don’t be surprised if nothing terribly dramatic happens until tomorrow.

UPDATE:  10:02 AM

There’s the SMA5 200.  We should get a reversal here, but CL is preventing it by suddenly spiking higher.   If it can push up through here, we have a good shot at the SMA20 at 2084.91. UPDATE:  10:28 AM

SPX is backing off the SMA5 200 without having tagged the SMA20.  Odd, though crude inventories are coming out in a few, which will probably explain it.  Tight stops!

UPDATE:  10:35 AM

Again, the EIA announced a decline in inventories the day after the API announced a rise.  CL loved it……while, SPX is underwhelmed.  Could it be that traders have finally caught on to this trick?  Or, maybe folks are just having a hard time imagining a bullish outcome to this afternoon’s FOMC announcement.   UPDATE:  10:41 AM

Watching CL fall back from its initial spurt, I’d revert to cash here and wait for the fireworks later.UPDATE:  11:31 AM

SPX just dropped through the SMA5 200, probably on its way to 2071.  Should be a nice little short-term trade, with the potential to drop on through to the .618 at 2062.06. The only hitch is ES, which will have channel support only 2-pts lower, and SMA5 200 support only 2 points lower than that.The reason I expect more from it is NKD, which just broke down from yesterday’s ramp.UPDATE:  12:28 PM

CL is dropping like a rock again, giving up most of the EIA gains.  But, SPX is being held right in place.  Clearly the little white dot isn’t in play any more — though the big white dot still makes sense if allowed to play out.  I have to duck out for 10-15 minutes, so watch your stops. UPDATE:  1:00 PM

This is going nowhere.  With the SMA5 100 almost to the white channel bottom, there’s a diminishing chance of a decent drop.  I won’t be surprised if it waits until the SMA5 100 is back to the SMA50, nearing 2pm, so it can close this morning’s gap and go into the announcement flat.

If you intend to play a short into the announcement, I wouldn’t expect any more than 2062, at least in the initial spike.  While, news that there’s no rate hike might also be interpreted as positive (though, it’s not really news if everyone already knows it, right?)

Past announcements produced wicked spikes, followed by long, slow meltups produced by USDJPY and/or CL.  So, whichever way you play it, use stops.  And, be prepared to be stopped out before a substantial move that would have made you a nice gain can unfurl.

Best idea of all…stay on the sidelines and watch the circus from the safety of a cash position.  I posted a downside range of 2010-2020 yesterday.  But, there’s little doubt that TPTB will do their best to portray whatever the Fed says as positive.  So, a spike to CL 54.76 that drags SPX higher over the next few days wouldn’t surprise me in the least. UPDATE:  1:34 PM

They’re not waiting for 2pm to start ramping.  NKD and CL are both popping higher, and VIX’s mandated decline looks like it could resume.  Good time to go back to cash if you haven’t already. UPDATE:  2:02 PM

I’d take a shot at shorting here at the white neckline and SMA20. UPDATE:  2:24 PM

Not much of a sell-off, for sure.  The US dollar has given up its gains from the past two days……which has dinged USDJPY pretty well.   CL has yet to declare its intentions.  Keep an eye on ES, which has yet to break down from the rising white channel — key word being “yet.”UPDATE:  2:32 PM

SPX finally reached the bottom of the rising white channel — the end of the easy money.  I’d step aside here.  Though, if it drops through, I’d revert to short.It’s the same white channel bottom we talked about tagging several hours ago at 2071.  But, this way, the channel gets legit while SPX never shows a loss on the day.  See?  Magic!

UPDATE:  2:40 PM

CL and USDJPY are duking it out, with USDJPY spiking and CL diving.  CL would need to drop below the white TL before it starts to have much of an impact. UPDATE:  3:38 PM

SPX is dipping below the channel line, but has the SMA5 100 and 200 to provide support.  I’d take a shot at shorting here due to CL’s dropping through the white TL. USDJPY is ramping to offset it, of course.  And, the SMA50 is just below at 2076.68.  So, watch your stops.UPDATE:  3:57 PM

They’re ramping NKD right now, so SPX has slowed its descent.  I’d go back to cash for the evening unless you’re able to hedge or watch it closely.  Otherwise, there should be more downside — at least to the .618 at 2062.06.