Financials

For those interested in an equity position rather than an options position, UYG (2x long) and FAS (3x long) would be the assets.

FAZ, 3x short is seeing deterioration.

FAS is a bit blah, but looks decent where it really counts, 5min and 15 min look pretty good. I think my plan would be to be patient and see if I can get a bargain on a market move to the downside, as far as the XLF call, it's long enough to deal with a sharp move down because I believe if that does materialize, it will be very short lived.

UYG (2x) long looks very similar. The 10 min looks great, I'm guessing a sharp move to the downside would allow the intraday charts to strengthen and link up with the 10-min chart, at that point, it's a very strong position.

I'd probably show some patience.

Update and Financial Position

My gut feeling was that we'd see another sharp, SHARPER move down, I think it's still possible, although since Bernie gave a date, the market will like that.

The one asset that looks good here is XLF, even though I know that draw down, even sharp drawdown is probable, but I think the signals and relative strength in 3C make me feel comfortable entering a Call position in XLF.

I'm looking at July $19. I'll take a closer look at the ETFs and follow up.

AAPL & FSLR long

I mentioned in the last update for these two that a "Head fake" move was probable during the initial knee jerk reaction, WE HAVE THAT MOVE IN AAPL.

Both stocks look good, they appear to be accumulating downside volatility. If I didn't already have full size positions, I'd certainly consider at least opening a partial position in either or both, I'd probably consider taking on a full size speculative position.

Good start.

This is the initial market reaction expected

Remember SPXU looking strong short term, this is why.

This is the downside we need as just mentioned in the "Last Pre-F_O_M_C post", I said,

"Certain 3x leverage long ETFs are improving like TQQQ, UPRO and URTY, they are not where I'd take a position yet, but I suspect any initial downside will be accumulated, if it is, that's when I'd likely step in."

This is what we are seeing so far, so it looks like we are on track., next to confirm positive accumulation 

OK, that's positive for the market

I haven't heard it all, but that is enough to give us the rally to the upside expected.

I'll be watching the volatility and looking for an entry.

AAPL and FSLR

Right now I'm getting all my quotes, systems set up to be able to move quickly if need be.

As far as AAPL and FSLR, I still love them, I think a short squeeze is likely, there may be a head fake move and that could happen in initial post policy volatility.

The charts.

 AAPL 10 min

FSLR 30 min

I can show you divergences that look a lot stronger and insanely strong, but they are shorter timeframes, the truth is, this positive divergence on a 30 min timeframe does not look visually as impressive as the shorter timeframes do, but it is a much stronger signal.

I'm holding open positions in both, I won't try to trade around them.

Otherwise assets that I'll be looking at will be UPRO, URTY, TQQQ, maybe FAS, etc.

Final Pre-F_O_M_C Update

Sorry to cut this so short, but I wanted to be as sure as I can which is not REALLY sure, but I think it's a plan.

To me it looks like there will be some initial negative reaction just because of the way some of the Ultrashort ETFs look, this could be a swing in minutes, I don't know.

I'm not taking any pre-statement positions, but waiting for the dust to clear and see if the path I see keeps building, then I'll jump in.

Take a look at CONTEXT, it kind of tells the story.

From negative to neutral, I expect it will move positive soon and the market will as the next tradable trend.

Certain 3x leverage long ETFs are improving like TQQQ, UPRO and URTY, they are not where I'd take a position yet, but I suspect any initial downside will be accumulated, if it is, that's when I'd likely step in.

XLF looks like it will improve, I'm not so sure about XLE. \

HYG's intraday charts look good, which is strange given my expectations, but it's longer, stronger charts look better so that does support my thesis.

VXX looks as if it is set up to support the market to the upside as the next TRADABLE trend.

The plan is to wait for the announcement, maybe even the presser, if the market reacts like I think, if any downside is accumulated, that's when I'd look at entering longs and calls, likely ETFs and market averages for the calls.

I wish I had a position going in to this, but I don't think it's worth it, too much stress, I still think patience is warranted, not because things are so unclear, but just because they are moving in the right direction, but not there yet.

Leading Indicators

Just like yesterday, I will not enter any positions unless they have a solid reason for doing so. I think if you are going to trade today, you need to be by the computer and ready to move.

If you are thinking more in terms of the general trend for the next day, couple of days, perhaps a week, I'd say that looks like it's shaping up to be to the upside, however it's still very new, it's just these other assets providing a hand add more credibility.

Those assets include, VXX which so far has been supportive of market upside, as I said about SPXU, it does look like VXX will make a quick move to the upside, that would help send the market down, but if that happens I expect it either before the F_O_M_C or in the initial chaos.

Yields right now are supportive, they are above price and calling price higher.

High Yield credit is surprisingly resilient for this uncertainty so I count that as supportive.

Commodities are also supportive.

That's what I have for now, I'd personally reduce some leverage and flatten out short term, I'll be looking for new signals that are developing now like the IWM long, I want to see some more strength there before taking a position, it may be after the policy statement, it may be after the press conference, it may be before, I just have to keep watching the charts. Heck, it may turn around and fail, the only thing that tells us now is the charts which are moving fast, they are becoming clearer, but still timing of specific intraday moves is questionable, therefore I'm looking at any potential trades to represent the next decent trend, as I said before and affirm now, after the Knee-Jerk reaction, I suspect that's a continued move higher setting up a bull trap.

More Evidence, More Confussion

For now, I still like how AAPL looks and FSLR, they will stay open.

There are a series of different divergences on similar timeframes, it's hard to tell if they are meant for a 1 hour trade or a 15 min pop or a few days.

For example, as of right now the way it looks, I would close SRTY long and SQQQ long, that makes some sense because the IWM has been building so SRTY would naturally look a bit worse.

However, as mentioned the SPY didn't look like it was building positive and as you'd expect, but probably not understand, SPXU looks good for at least a short term move higher.

To make it even more confusing, the Index futures look like they are building.

Personally, I'd reduce leverage in those particular trades, perhaps SPXU pops just before the F_O_M_C and then sinks.

I have a number of other items that look as if the market is getting support from other asset groups to make that move higher discussed in the last post or two ago.

I'll let you chew this over with your positions and the next post I'll tell you what other assets are SUPPORTIVE of the market making a move higher near term as in the next move or short (time) trend.

Best Guess

And unbelievably, it's not too far off at all from our original expectations 3 weeks ago yesterday.

The SPY Arb is in no way what instigated any of the near term analysis, it was confirmation of what I already thought was happening.

 SPY Arb looks like they are pulling the levers to support the market.

Since the IWM is the cleanest and I believe the most reliable right now...

 Intraday it needs a little time (by the announcement should be fine) to put its  base together, this would explain why AAPL and FSLR look good in this area.

I'm guessing the first knee-jerk reaction to the policy statement is positive, you'll see how this all fits together.

 3 min intraday improving, it's going through the reversal "PROCESS"

 IWM 5 min. So I'm guessing after initial first few mins of volatility, the first wave after the F_O_M_C will be up. If we get just a few more better signals I may consider some longs and some calls before the F_O_M_C.

The 10 min chart shows pretty much what we expected 3 weeks ago, the triangle breaks down, creates a bear trap and rallies past the apex which it has done and then makes an even stronger move from there (after the F_E_D) and that sets up the BULL trap and then down we finally go.

That's my working thesis as things start to clear up, we'll have to be fast, but I think there will be a lot of opportunities over the next week.