Weak data in Europe and disappointing initial jobless claims in the states have sent futures lower this morning.
Bernanke's press conference yesterday did not reveal anything that the market didn't already know, so I can't say my overall bias changes one way or the other following the comments. We continue to be trading in a range with support in the low to mid 1350s ES and Resistance in the high 1380s ES. We'll eventually break out of this range and my bias remains that we will make lower lows before we make higher highs.
Regarding the FOMC announcement, the one major point of significance that I can't ignore, is the emphasis that Bernanke put on how accommodative the Fed has been in its effort to ensure that the economic recovery continues. He made it clear that if economic conditions warrant it, the Fed will use the tools in its toolkit as necessary. He actually responded to a question about QE3 and said that the Fed would initiate QE3 as needed. This is not going to be the catalyst to send the markets back up to the highs in the immediate term, but it is a philosophy of the Fed that will keep a floor underneath the markets looking forward. And all this means is that if things get bad in the future, the Fed will prevent the market from crashing like we experienced back in 2008 and early 2009. It basically takes the fear out of the equation and tells me I can be a confident buyer when the time comes that things look to be at their worst.
Levels to watch today on the ES:
Resistance above at: 1387-1388, 1392-1393
Support below at: 1381-1382, 1375-1376, 1371-1372
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