Well, yesterday on FOMC day everything went as planned...at least somewhat. The Fed pretty much did what they had been suggesting that they were going to do, and the markets reacted in kind as the equity indices rallied. However, the rally following the 2:00 p.m. EST FOMC headline didn't last, and then the S&P 500 reversed, selling off 32 handles from the high. If you take everything into account, it didn't end up being a very good day for U.S. stocks.
The ESM19 volume was under 900,000 contracts before the Fed headlines but ended up 1.64 million to close the day. This means that over 765,000 E-minis traded following the 2:00 headlines, and most of it was downside volume. The initial rally shook out the shorts, and the late day drop shook out the longs.
I am not going to do a big view today. We all saw the price action, and it wasn't good. Even the bulls got a bit shaken up by the sell-off.
Our view is that, based on the price action, one would think we would begin to see lower prices. We see support at the 2816-2818 area and again at 2810-2812. Are the indexes finally setting up for the long-awaited pullback? I guess so, but with the firm bids that have come back into the stock markets since the end of December, which have given layers of support, I do not expect a sizable down move. Ideally, we want to see what happens overnight and get a look at the 9:30 EST open today, but our lean would be to buy early weakness and sell the rallies.
Today’s Economic Calendar:
- Jobless Claims 8:30 AM ET
- Philadelphia Fed Business Outlook Survey 8:30 AM ET
- Leading Indicators 10:00 AM ET
- Quarterly Services Survey 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- 52-Week Bill Announcement 11:00 AM ET
- 2-Yr FRN Note Announcement 11:00 AM ET
- 2-Yr Note Announcement 11:00 AM ET
- 5-Yr Note Announcement 11:00 AM ET
- 7-Yr Note Announcement 11:00 AM ET
- 4-Week Bill Auction 11:30 AM ET
- 8-Week Bill Auction 11:30 AM ET
- 10-Yr TIPS Auction 1:00 PM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET