There were four phases of the most recent sell off. Friday’s weakness, a slide in Globex Sunday night, a further drop on Monday’s 8:30 CT open, and then the selloff after the lower open. Each of the four instances offered you an opportunity to sell, but if you ask me, most of the selling was done after they opened lower and sold off on Monday.
A 27-handle selloff in two days and it had all the making of something really bad right?. Most people didn’t sell it until it was down sharply after Monday’s open. They didn’t sell it Friday, they didn’t sell it Sunday night, they sold it after it sold off on Monday… Remember what happens when everyone gets bearish at already low prices?
A few days ago a MrTopStep follower sent me an email. He was apologizing for not entering the boot camp (220 people signed up). I get some pretty good emails from people, and the one I got today was a good one. I offered to rebate back the boot camp fee to a few people, and everyone said the same thing, that for what I do they don’t want it back. One trader who emailed said he had been trading for 5 years, for the most part unsuccessfully, but he went on to thank me for helping him start to recognize the patterns. He mentioned that he no longer falls into the trap of being bearish into the declines, and that he is now making money.
This is the stuff I live for, and I have always said that maybe I didn’t get you long; but maybe I got you to cover your short and saved you money. To me its all the same. Today is the second day of the FOMC meeting and I get the feeling it’s going to be a “market-moving” event. Fed Chair Janet Yellen is going to send a clear message that the central bank is going to raise interest rates this year. According to a CNBC Fed survey, 92% of the participants said they believe the central bank will begin to raise rates this year, and 53% said they felt there would be two rate hikes. While I can not completely rule out the rate hikes, I still have a hard time thinking they follow through this year, but expect the rate hikes to start in the first quarter of 2016. After saying so many times the Fed will raise rates this year, if they don’t, it will look like the Fed is lacking any consistency in their policy. Just two weeks ago Yellen laid out the case for raising rates this year despite a warning by the IMF to hold off.
Today could be a pivotal day for the S&P 500, but whatever the Fed decision is, it’s not going to stop the problem for the Greek creditors. Fed officials will release a statement and new economic and interest rate forecasts at 2 p.m. ET Wednesday. Yellen also holds a 2:30 p.m. press briefing. There is a lot more to this meeting than several of the past. Just don’t forget MrTopStep’s trading rule about fading the first move after the headlines hit the tape.
In Asia 8 out of 11 markets closed higher (Shanghai Composite +1.65%), and in Europe 7 out of 12 markets are trading lower this morning. Today’s economic calendar includes MBA Mortgage Applications, EIA Petroleum Status Report, FOMC Meeting Announcement, FOMC Forecasts, and a Fed Chair Press Conference.
Our View: The ES closed firm and rallied to 2091 in Globex early last night. I think there is more upside, but I also think the Fed could throw a curveball at the old spoos. So is the ES out of Dodge yet? I’m not sure, but I won’t rule out some type of rip above 2100. Like I keep saying, the ESM is not going sharply lower or sharply higher… Our view—I think higher but I’m not sure the ES will hold it for long.. And don’t forget to fade the initial move after the Fed headlines hit the tape. Didn’t I just say that? Yep, and now I’ve said it twice. You can take it from there…
- In Asia 8 of 11 markets closed higher : Shanghai Comp. +1.65%, Hang Seng +0.70%, Nikkei -0.19%
- In Europe 7 out of 12 markets are trading lower : DAX -0.23%, FTSE -0.47%, MICEX +0.05% , GD.AT -0.23% at 6:00 am CT
- Fair Value: S&P -9.16 , Nasdaq -9.49 , DOW -94.30
- Total Volume: 900k ESU and 9k SPU traded
- Economic calendar: MBA Mortgage Applications, EIA Petroleum Status Report, FOMC Meeting Announcement, FOMC Forecasts, Fed Chair Press Conference..
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