There is just one number to keep in mind Wednesday, and that is 880 – – if the S&P breaks 880, the bears are going to seize more control; if we keep above 880, and particularly if we rally back into the low 900s, the bulls are going to get a renewed sense of confidence. The shelf of support at 880 is a key line in the sand.
Looking at the daily chart, the bulls have 925-950 as a serious area of overhead supply they would have to push above in order to really run with the market again. I personally think the failure to launch above 950 in the first half of June is serious enough to give the bears some comfort. But, let's face it, FOMC days are weird, and who knows what is going to be said or how the market is going to react. The desire of the market to be able to make it to June 30 with some hefty gains intact is going to be very strong, and there are six trading days left in the quarter. The bulls are going to do everything they can to use that headwind to their advantage.
It remains very important to keep an eye on the currency markets. The EUR/USD, shown below, seems more likely to soften than strengthen to me, given its behavior the past eight months. I re-entered a big USO short position near the close of trading Tuesday, since I view Tuesday's weakness in the dollar as a one-hit wonder.
Just to add some tremors to my own trading life, I'm going to be taking a plane ride back to the Bay Area for a meeting Wednesday, and I'll be landing at just about the time the Fed announcement comes out. I tend to step aside for at least 20 minutes after such announcements anyway, but it'll be interesting to land and fire up the iPhone to see what gymnastics the market is going through.
I don't have much more to say, since today wasn't that interesting. I'm pretty much out of all my big positions, except for shorts in QQQQ and USO, but I took most of my big boys off the table late on Monday. Thanks for swinging by.