Yesterday was a strange day to say the least. To start with SPX overshot the obvious H&S neckline by 11 handles, which weakened the H&S setup even though the bounce I was talking about yesterday morning then delivered in spades. That bounce was then apparently fuelled by the Fed unexpectedly reinstating $6bn of POMO that had previously been cancelled, and the bounce was a very strong squeeze that ran a very impressive 52 handles from low to high.
So what’s the takeaway, apart from the obvious that as well as distorting the economy on the bigger picture, the Fed can also make trading tricky on an intraday basis?
