5 Things to Watch on the FOMC Announcement
The reaction to news will be more important than the news itself.
The waiting is the hardest part...
The entire (investment) world is chomping at the bit for Big Ben to chime at 2:15 p.m.; here are some things to keep an eye on following the announcement.
1. Gold: It's been under pressure, -23% since October with a persistent pattern of lower highs. One would think that a fair amount of tapering has been priced in; the yellow metal needs to hold $1,350 to maintain the emerging attempt at 'higher lows.'
2. The Financials: Note the flag pattern in the BKX INDEXDJX:BKX); these patterns tend to resolve in the direction of the prevailing trend (in this case higher), but that's not written in stone. Goldman Sachs Group Inc (NYSE:GS), in particular, should be on your radar; it's been a tremendous single-stock tell.
3. Market Internals: They'll lag, as futures will provide the quickest exposure for active
4. The Dollar: A higher dollar should be a headwind for stocks, and vice-versa, all else being equal (which it rarely is).
5. S&P 1650: This is 'the' pin into Friday, and it will be a magnet until then. The ability of the tape to meaningfully meander from that strike will offer a stealth clue. The further away it moves, the less attraction it will provide into the back-half of the week.
For my part, my pad is pared with a short bias; long some single stock situations and some SPY December puts, and I'll trade around that as a function of time and price. And remember, the first move is typically the false move after the FOMC!
Pennant in the piggies!:
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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