It's What the Fed Says, Not What It Does

Fed will raise 25 basis points, but the press conference is the wild card.

Technical Edge — 

• NYSE Breadth: 89% Upside Volume (!)

• Advance/Decline: 85% Advance 

• VIX: ~$19.50

Now it’s Fed time. There is a greater than 99% chance the Fed raises by 25 basis points today, so that is the baseline assumption. So it’s not what the Fed will do today that matter, it’s what the Fed will say during the press conference. That is the wild card.

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As good of action as we had yesterday, we’re still below last week’s high and struggling to regain 4100 (on the ES). 

I’m curious to see the action ahead of the Fed. Do push higher, into (and perhaps over) last week’s high? Directionless chop? How about sulk lower until the news? 

Either way, the algos are going to run wild this afternoon. 

S&P 500 — ES 

Yesterday, we wanted the ES to reclaim the prior day’s low at 4030, which put “4045 in play, then 4050, 4063 and finally 4075-78.” The ES exceeded the top end of that range by 10-15 points with that late-day surge. 

If we can clear last week’s high and do so sustainably, 4175 is back in play. That is roughly the Q3 and Q4 high.  

On the downside, 4020 to 4030 is the first area of support, but a break of yesterday’s low at 4007 and failure to regain it could open the door down to the 3960s. 

SPY