Pre-F_O_M_C Update

I suspect the F_E_D isn't going to say much of consequence today, unless they add to the recent hawkish tone with regard to rate hikes and timing, other than that I'd expect the 10 bn taper and the final $15 bn taper for October.

I suspect we are going to see a F_O_M_C Knee-Jerk reaction to the upside, there are several reasons such as how bad market breadth is right now which creates a short term oversold condition, but the main reason is positive divergences building intraday in all of the major averages. I'd even consider a call position if they keep building and don't fire before 2 p.m.

From a practical standpoint, this makes me glad I closed the Z put position when I did as it has moved sideways most of the day and now is starting to move up, just taking out my Trend Channel stop so those puts are going to start losing value.

The other practical purpose is something like XLF which is looking like a very strong short from a 3C perspective, but I never like shorting weakness or chasing it, so this may be an opportunity to enter some decent positions at better prices.

As far as how much or how far, this is mainly a divegrence picking up today, it's not a game-changer by any means, but a half day divergence (positive) can certainly move up on a knee-jerk , especially on a meeting that has very low expectations for anything of substance, almost a relief bounce.


I'll have some charts up shortly and I'll decide if a call position or even a short term long trade is worth the risk.

Usually when we see divergences before the F_E_D we have to consider the possibility of an embargoed policy statement having been released to Wall St., heck the F_E_D itself has leaked minutes to Wall Street a day in advance on a special mailing list to 154 of the largest private equity/institutional firms. If the divegrence looks very strong, I'd suspect a leak, I've found about 3 of these over the years that were just undeniable.