Like nervous high school boys dressing for the prom, investors everywhere are wondering whether or not Janet Yellen will deliver the goods today. Her fellow FOMC members have practically guaranteed a rate hike by July, maybe even June.
There’s no better indicator than the US dollar, which has spent the past 10 days or so dancing around a range of support — formerly resistance.
continued for members…
A quick look around the horn shows oil moving below the purple TL for the first time all week — then, just as quickly popping back up. I’ve placed the red target where I believe it can effect a drop by SPX to 2076-2078. But, it might have to move lower. Remember, it’s a tool – nothing more.
USDJPY did the same.
Note that even NKD is having an off day.
And, EURUSD is finally breaking down.
My expectation remains that SPX will test the rising purple channel bottom either late today or Tuesday. I’d stay short as long as things don’t start ramping today. And, even then, I’d use fairly loose stops in anticipation of plenty of head faking.
ES equivalents:
With that, I’m going to leave you, and return to the post I had hoped to get online yesterday — a study of past Memorial Day weekends (overlaid with the upcoming Fed announcement) that I think you’ll find interesting.
UPDATE: 3:46 PM
Almost finished with the other post. In the meantime, SPX keeps melting up. 
Pretty odd, but the dollar and oil are both going through the roof. Actually, DX is about to run out of room. 
But, I see no reason for CL to do so.
If DX reverses, then USDJPY’s breakout above the white TL could quickly be undone.
I’d never advocate holding short over a 3-day weekend, but this is one of those times you should consider it if you can hedge or otherwise manage the risk.
As you’ll read in Memorial Daze, there’s a good chance of a big breakout move come Tuesday. But, this could also be the equivalent of May 31, 2011 — the calm before the rate rising storm.
Go with your gut. But, as always, trade safe. The 25 point drop I anticipate isn’t worth doing something that’ll ruin your weekend. There will be other opportunities to make that much and more.
GLTA.
Comments
8 responses to “Will She or Won’t She?”
So rate hike so can cut. Got it. Break our your DOW 30,000 party hats.
Isn’t it wonderful? With any luck they can get the hike in place before the headlines get ugly enough to dictate a cut.
should have titled today’s blog post ‘Ol’ Yellen’
I like it. Will use it down the road, for sure. The challenge is finding something that conveys my disdain for everything the fed does…without resorting to name calling.