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Jason Haver: Recent Market History Offers Warning for Today's FOMC Day
A look at what's happened to the market in the recent past when this event falls during an OpEx week.
Jason Haver    

Today is FOMC day, which is typically a great day for traders who enjoy volatile whipsaw markets and feelings of righteous indignation. Recent market history suggests it may also be something more.

In Monday's update, I discussed that I felt the market had reached an inflection zone and that it had the potential to put together a decent rally.  The S&P 500 (INDEXSP:.INX) has since rallied to within 10 points of the all-time high, which is an important resistance level. And now things get interesting again, especially since this week we have March options expiration (OpEx), in conjunction with the FOMC meeting. During 2013, there were three FOMC meetings that fell during OpEx weeks, and all three led to major turns (plus or minus only one trading day). I've highlighted this on the long-term SPX chart that follows.

The long-term SPX chart shows that there are two potential intermediate counts in play, and a clear victor still hasn't emerged yet. If bulls can sustain trade above the up-sloping red trend line (on the chart below), then the market will likely take aim at the 2000's. For the moment, though, the all-time highs and said red trend line must be respected as resistance. 

It's also interesting to note the prior decline found support after a perfect test of the dashed red median line and is now testing the blue trend line.
 

Click to enlarge

On the 30-minute SPX chart, I've outlined the bull/bear key overlaps and the bearish pivot zone. I've also revisited the near-terms wave structure slightly in order to explore how the decline could be counted impulsively -- this is largely an academic exercise with this type of ambiguous structure, as opposed to being predictive (as it sometimes is). The rally off the low is three waves so far.
 

Click to enlarge

Finally, let's update the USDJPY Forex chart. I'm still inclined to lean near-term bullish on this pair until my target of 102.600 +/- is reached on the upside (at which point I would become neutral leaning bearish), or until dollar/yen sustains trade beneath 100.750 (at which point I would become bearish). 
 
The first meaningful level is 101.200: A quick whipsaw would be OK, but sustained trade south of 101.200 would suggest a retest (or break) of 100.750 (shown as the gray alternate count) -- and the same rules then apply to the 100.750 level, but on a larger scale. As with many charts, the first key level (101.200) provides warning that a trip to the next level is likely.
 

Click to enlarge

In conclusion, I was bearish early in March and remained so until Friday's close, at which point I shifted to near-term bullish. I would currently label myself as neutral for the following reasons: 

1. The intermediate wave structure has a bearish bias until the noted levels are reclaimed; this conflicts with the intermediate trend, which is still bullish. 

2. Price is clearly in a bullish near-term trend for the moment. 

3. Both trends face resistance at the noted key levels -- meaning those price zones potentially have the power to stall or reverse the trend. If the market instead sustains trade above those key levels, then odds are good the trend will accelerate. 

It will be interesting to see if the FOMC meeting today, in conjunction with options expiration week, generates a major reversal as it has on the past three occasions. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Recent Market History Offers Warning for Today's FOMC Day
A look at what's happened to the market in the recent past when this event falls during an OpEx week.
Jason Haver    

Today is FOMC day, which is typically a great day for traders who enjoy volatile whipsaw markets and feelings of righteous indignation. Recent market history suggests it may also be something more.

In Monday's update, I discussed that I felt the market had reached an inflection zone and that it had the potential to put together a decent rally.  The S&P 500 (INDEXSP:.INX) has since rallied to within 10 points of the all-time high, which is an important resistance level. And now things get interesting again, especially since this week we have March options expiration (OpEx), in conjunction with the FOMC meeting. During 2013, there were three FOMC meetings that fell during OpEx weeks, and all three led to major turns (plus or minus only one trading day). I've highlighted this on the long-term SPX chart that follows.

The long-term SPX chart shows that there are two potential intermediate counts in play, and a clear victor still hasn't emerged yet. If bulls can sustain trade above the up-sloping red trend line (on the chart below), then the market will likely take aim at the 2000's. For the moment, though, the all-time highs and said red trend line must be respected as resistance. 

It's also interesting to note the prior decline found support after a perfect test of the dashed red median line and is now testing the blue trend line.
 

Click to enlarge

On the 30-minute SPX chart, I've outlined the bull/bear key overlaps and the bearish pivot zone. I've also revisited the near-terms wave structure slightly in order to explore how the decline could be counted impulsively -- this is largely an academic exercise with this type of ambiguous structure, as opposed to being predictive (as it sometimes is). The rally off the low is three waves so far.
 

Click to enlarge

Finally, let's update the USDJPY Forex chart. I'm still inclined to lean near-term bullish on this pair until my target of 102.600 +/- is reached on the upside (at which point I would become neutral leaning bearish), or until dollar/yen sustains trade beneath 100.750 (at which point I would become bearish). 
 
The first meaningful level is 101.200: A quick whipsaw would be OK, but sustained trade south of 101.200 would suggest a retest (or break) of 100.750 (shown as the gray alternate count) -- and the same rules then apply to the 100.750 level, but on a larger scale. As with many charts, the first key level (101.200) provides warning that a trip to the next level is likely.
 

Click to enlarge

In conclusion, I was bearish early in March and remained so until Friday's close, at which point I shifted to near-term bullish. I would currently label myself as neutral for the following reasons: 

1. The intermediate wave structure has a bearish bias until the noted levels are reclaimed; this conflicts with the intermediate trend, which is still bullish. 

2. Price is clearly in a bullish near-term trend for the moment. 

3. Both trends face resistance at the noted key levels -- meaning those price zones potentially have the power to stall or reverse the trend. If the market instead sustains trade above those key levels, then odds are good the trend will accelerate. 

It will be interesting to see if the FOMC meeting today, in conjunction with options expiration week, generates a major reversal as it has on the past three occasions. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap
Jason Haver: Recent Market History Offers Warning for Today's FOMC Day
A look at what's happened to the market in the recent past when this event falls during an OpEx week.
Jason Haver    

Today is FOMC day, which is typically a great day for traders who enjoy volatile whipsaw markets and feelings of righteous indignation. Recent market history suggests it may also be something more.

In Monday's update, I discussed that I felt the market had reached an inflection zone and that it had the potential to put together a decent rally.  The S&P 500 (INDEXSP:.INX) has since rallied to within 10 points of the all-time high, which is an important resistance level. And now things get interesting again, especially since this week we have March options expiration (OpEx), in conjunction with the FOMC meeting. During 2013, there were three FOMC meetings that fell during OpEx weeks, and all three led to major turns (plus or minus only one trading day). I've highlighted this on the long-term SPX chart that follows.

The long-term SPX chart shows that there are two potential intermediate counts in play, and a clear victor still hasn't emerged yet. If bulls can sustain trade above the up-sloping red trend line (on the chart below), then the market will likely take aim at the 2000's. For the moment, though, the all-time highs and said red trend line must be respected as resistance. 

It's also interesting to note the prior decline found support after a perfect test of the dashed red median line and is now testing the blue trend line.
 

Click to enlarge

On the 30-minute SPX chart, I've outlined the bull/bear key overlaps and the bearish pivot zone. I've also revisited the near-terms wave structure slightly in order to explore how the decline could be counted impulsively -- this is largely an academic exercise with this type of ambiguous structure, as opposed to being predictive (as it sometimes is). The rally off the low is three waves so far.
 

Click to enlarge

Finally, let's update the USDJPY Forex chart. I'm still inclined to lean near-term bullish on this pair until my target of 102.600 +/- is reached on the upside (at which point I would become neutral leaning bearish), or until dollar/yen sustains trade beneath 100.750 (at which point I would become bearish). 
 
The first meaningful level is 101.200: A quick whipsaw would be OK, but sustained trade south of 101.200 would suggest a retest (or break) of 100.750 (shown as the gray alternate count) -- and the same rules then apply to the 100.750 level, but on a larger scale. As with many charts, the first key level (101.200) provides warning that a trip to the next level is likely.
 

Click to enlarge

In conclusion, I was bearish early in March and remained so until Friday's close, at which point I shifted to near-term bullish. I would currently label myself as neutral for the following reasons: 

1. The intermediate wave structure has a bearish bias until the noted levels are reclaimed; this conflicts with the intermediate trend, which is still bullish. 

2. Price is clearly in a bullish near-term trend for the moment. 

3. Both trends face resistance at the noted key levels -- meaning those price zones potentially have the power to stall or reverse the trend. If the market instead sustains trade above those key levels, then odds are good the trend will accelerate. 

It will be interesting to see if the FOMC meeting today, in conjunction with options expiration week, generates a major reversal as it has on the past three occasions. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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