The Fed decision is imminent. SPX is 1586.18. VIX is 14.49. Commodities are getting crushed today; copper, oil, gasoline, steel, iron ore, gold, silver, any commodity on the screen. Oil inventories are at historic record highs. 'No one need's that steenkin oil' since the global economy is slowing. The China HSBC number this evening around 10 PM EST is important in light of last evening's China data since it will either confirm the weakness, and further hurt commodities tomorrow, or not. The 10-year yield is down another tick to 1.62% sinking further into deflation.
Note Added 2:00 PM: The Fed leaves the rates unchanged as expected. The 85 billion per month purchases continue until the labor market improves. The Fed may increase or reduce the purchases as the economy improves, or not. Unemployment rate remains elevated. The committee sees downside risk. The Fed says inflation is below their targets but does not appear to address the deflation situation that Keystone has highlighted. Market reaction is muted and does not know which way to turn. Analysts are stressing the 'increase' word as a hint of more QE, as well as downside risk, so the bulls are hanging their hat on that.
Note Added 2:07 PM: So far, markets drop, then jump, then drop, now price is where it was seven minutes ago before the announcement. VIX is weaker at 14.24. TRIN 1.42. Bulls receive a tiny market lift but overall the Fed decision appears to be a non-event, so far. The 8 MA remains under the 34 MA on the 30-minute. The 8 MA is 1590 so watch this level since the 8 MA can only curl higher if the SPX moves above 1590. If the SPX stays under 1590, the bears should cruise into the closing bell.
Note Added 2:29 PM: Look at VIX fall under 14 again, but, recovers. SPX is 1589.01.
Note Added 2:35 PM: The Fed using the 'increase' word for QE does not appear to be helping the equity bulls. Perhaps folks are staring at Chairman Bernanke, with eyes bulging like frogs, for now they see the Emperor is not wearing any clothes. SPX 1588.05. VIX 14.15. TRIN 1.37. LOD is 1584.70 so watch that number.
Note Added 3:33 PM: Markets are lower now than before the Fed. SPX has a 1583 handle with a LOD at 1582.40 losing the prior low. VIX 14.53. TRIN 1.65. Dollar/yen 97.29 flatish all day long. The SPX, Dow and Nasdaq are all down -0.8% while the RUT (small caps) and Trannies (Transportation Index) are receiving beatings today both down -2.2%. The RUT and TRAN monthly charts printed a negative month for April yesterday so traders are throwing them overboard today. Utilities, UTIL, are down -1% experiencing a rare down day.
Note Added 3:52 PM: The SPX prints a new LOD at 1581.28. FB earnings are on tap after the bell. Zuck is practicing his tap-dancing routine in front of the mirror. FB continues to develop the handle for a C&H on the weekly chart, the break out line is 32-33 that would take it back to the IPO price over time. The gap at 24-ish, however, were never filled.
Note Added 4:05 PM: The bears win one today. Maybe the NYMO chart identified the market top. AMD has a huge up day; that one finally played out with a happy ending for the long side, for those that were patient. Keystone was not and took a loss in AMD to start the year which now, only a few weeks later, would have been a nice profit. No sign of FB earnings; the stock closed at 27.47. Maybe Zuck is hiding under his desk.
Note Added 4:08 PM: FB misses by a penny with top line revenue in line. What happened to all the growth? Traders must like it, however, with the stock trading up +2.5% AH's. FB is 27.92. Whoops. Now up +1%. FB is slipping on a banana peel. There goes the upside print, now negative. FB printing 26.95 losing a buck in about one minute. FB is jumpy it will need time to settle out which will allow time for Zuck to come out from under the desk to see if the coast is clear.
yeah! let's increase QE4! That would help. All other QE-programs haven't helped one bit. insanity: doing the same thing over and over again, expecting a different outcome.
ReplyDeleteLooks like the bullish trader's are trying to latch on to the 'increase' word for QE but markets are flat after the announcement. Looks like all eyes will wait for the ECB drama in the morning. Interestingly, everyone has to place their bets over the next hour today, into the close, since the U.S. regular markets will open tomorrow knowing the ECB outcome.
ReplyDeleteKS, I raise this only because it's indicative of why the bulls may be disappointed this summer. The FOMC meeting in mid-June features a press conference by Bernanke. But will the Committee really have enough new economic data to warrant raising QE by then? The July meetings don't include an ending press conference by Bernanke. And we already know he's skipping Jackson Hole in August. So does that leave the September FOMC meeting with an explanatory news conference as a more likely candidate for announcing more QE? (The ECB will likely disappoint tomorrow if it only cuts rates and the Friday job report is rumored to be under 100,000.)
ReplyDeleteBernanke will likely just remain quiet all year long and that in itself may serve as a structured tapering (since traders will read into what he is doing as a signal he does not plan on increasing QE). Increasing QE is at this point, reckless, the Chairman knows this, that is why he likely did not mention the 'd' word, deflation, and played that angle down, he is staying away from that since if there is a whiff of deflation, he is supposed to be the savior and pump to save the markets, like he has each time over the last four years. Bernanke may hide under his mahogany desk until January when he will resurface and hand the gavel to Janet Yellen, and then make his way to the nearest fishing hole, followed by a book deal one year later.
ReplyDeleteWhat will the book be titled - "The Creature from Augusta, Georgia"?
DeleteArnie, did you add short positions today or just waiting for confirmation since Keybot is still long? Latest EW count?
ReplyDelete