Nothing has changed since yesterday. The markets are still in play short term after a solid up day the S&P 500 closed at 1903 well above our watch out area.
News Driver: North American markets in “wait and see” mode for today’s 2pm FOMC rate meeting. Oil is trading at $30.50 as I write this and is trading in a range waiting for the 10:30am Crude Oil Inventories report.
European markets are down slightly and Asian markets bounced back nicely overnight (excluding China, it was flat)
Into the open we see a weak-form risk-off tone to equities globally, anticipating an indecisive trade leading into Yellen’s 2pm (EST) Monetary Policy announcement.
MID-LONG TERM (Weeks-To-3Months+): Bearish
If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term. Look to De-risk long positions with rallies unless you can stomach the volatility.
SHORT TERM (Days-To-Weeks): Bullish
Entering this week higher risk long side positions were on play with the deeply oversold technical bounce that started January 20th, 2016. S&P 500 (SPY), Nasdaq (QQQ), Russell 2K (IWM), Int’l Developed (EFA), Emerging Markets (EEM) and TSX (XIC).
We remain in HOLD mode on these positions into the open, looking for a momentum break above 1,928-1,921 on the S&P 500.
S&P 500: The S&P 500 pre-market is down -0.22% but filling the gap between yesterday’s close (pre-market uptrending); the Nasdaq & Russell 2K are lagging.
I anticipate the S&P 500 to open above 1,880-1,870 (key support) and print indecision in a tight range leading into Yellen’s announcement.
TSX: Likely to under-perform to start the day’s trade. The TSX holding above 12,185-12,145 into the open, a break above 12,345-12,300 post FOMC could imply a further nibble for short-term bounce trades picked up on Jan 20th; and re-enforce the HOLD decision for mid-to-longer-term positions within the TSX.
Bonds/Gold: Defensive assets are also mildly weakening, atypical for a weak-form risk-off day (but today is all about what the USD will do and how much “faith” will be instilled in the US economy from Yellen).
USD: The USD is mildly weakening across the board in today’s trade which may foreshadow a risk-on outcome from the FOMC announcement;
Oil: $30.75 9am: Began rallying at 6:45am the hourly chart resistance is $32.35. The 10:30am inventories report will be a factor followed by the FED at 2pm.
The Crude Oil inventory data print from API last night was ugly showing 11M+ barrel build versus a 3.3M forecast.
Economic Calendar: Some big market drivers due out today. First up is the New Home Sales at 10am. Followed by Crude Oil Inventories at 10:30am and of course the FOMC meeting at 2pm. The markets are waiting cautiously for what Yellen has to say.
Earnings: Apple disappointed yesterday. Tim Cook was quoted saying “Extreme conditions unlike anything we’ve experienced before” When the biggest company in the world says times are tough you should take note.
Another busy day for earnings today. Check our site earnings calendar for a complete list. Here are a few big names to watch. Biogen, CGI Group, Citrix Sys., Discover, Facebook and Norfolk Southern
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