Trading action today is phenomenally computer driven. The algorithms are having a fierce battle against one another and are keeping price action confined to a very tight range with incredible precision. If you open a Momentum bar chart set to have a new bar form with each one point move and load up the @ES (S&P 500 Futures), you can see how non-human-like the action is. See video below:
Tuesday, November 2, 2010
FOMC Meeting and Mid-Term Elections Upon Us
What does it all mean? Well, I am expecting some market volatility this week. The FOMC is likely going to commit to releasing another $500 billion to stimulate the economy. I think for the most part, this is already priced in as markets have been climbing over the past 2 months while the dollar has been weakening. That being said, if we get news confirming big republican wins in the house and senate coupled with news of exorbitant quantitative easing by the Fed, then the markets could break upwards to threaten and potentially break the highs we saw last April.
So we'll see how all the news plays out this week. But keep in mind, since August 31st, the S&P 500 is up 14%, the Dow is up 12%, the Nasdaq is up an astounding 20% and the Russell is up 17%. Such a big rally likely means that some of the news regarding another round of QE and Republicans winning in the elections is already priced into the market. So don't be surprised to see the market sell on the upcoming news.
Now if the Fed surprises us by committing less than $500 Billion more in QE and/or the Democrats win more seats than is expected, then the odds for the market to fall become even greater. I will be looking for short entries as the week unfolds. The only way I won't be looking for short entries, is if the Fed really tries to inflate the market by offering even more QE than expected. In any case, I'll let the market react to the news before entering into any swing positions prematurely.
Levels This Morning in the S&P Futures (ES):
Support: 1181-1183, 1173-1175 | 1167-1169
Resistance: 1186-1188, 1191-1193 | 1197-1199
So we'll see how all the news plays out this week. But keep in mind, since August 31st, the S&P 500 is up 14%, the Dow is up 12%, the Nasdaq is up an astounding 20% and the Russell is up 17%. Such a big rally likely means that some of the news regarding another round of QE and Republicans winning in the elections is already priced into the market. So don't be surprised to see the market sell on the upcoming news.
Now if the Fed surprises us by committing less than $500 Billion more in QE and/or the Democrats win more seats than is expected, then the odds for the market to fall become even greater. I will be looking for short entries as the week unfolds. The only way I won't be looking for short entries, is if the Fed really tries to inflate the market by offering even more QE than expected. In any case, I'll let the market react to the news before entering into any swing positions prematurely.
Levels This Morning in the S&P Futures (ES):
Support: 1181-1183, 1173-1175 | 1167-1169
Resistance: 1186-1188, 1191-1193 | 1197-1199
Subscribe to:
Posts (Atom)
