World markets are basically flat this morning as they hold onto yesterday's gains ahead of the US FOMC rate decision tomorrow. Even Japan is flat, a break from the extreme volatility we have seen in the Nikkei for the past several weeks. The index is now digesting a two-day 5% gain that could mark a swing bottom.
S&P futures are up 3-5 handles and are perhaps ready to knock on the door of resistance that it couldn't penetrate and close above yesterday. The downtrend of this upper level wedge/pivot area stands at approximately 1642-1648. A close above this level with power could cause some shorts to cover and could bring some additional money in this market. Tomorrow is obviously the big Fed announcement, so we may not have much power until that announcement.
I think the Fed watches the marker more than they let on, and started this “tapering” talk as a litmus test. The fact that the double bottom at the 50-day MA held I think could give them confidence to taper from perhaps $85 billion to $60 billion in September.
Scott Redler discussed what to expect from the Fed on CNBC Asia last week:
At this point there are some constructive patterns out there, with many of them concentrated in tech. Many of the set-ups are highlighted in last night’s Off the Charts newsletter below.
*DISCLOSURES: Scott Redler is long AAPL, DDD, BAC, GOOG. Short SPY.