If you haven't heard, today is Fed Day. The FOMC will announce
its rate decision at 2 p.m. EDT, followed by a press conference
from Chairman Ben Bernanke. The US central bank is expected to
stand pat while talking more seriously about QE tapering as early
as September's meeting. The market has bounced twice off the 50-day
moving average leading up to the announcement, suggesting perhaps
that investors are not overly afraid of a slower pace of asset
US stock futures were following through on yesterday's strength
early this morning, but have faded back to near the flat line.
European markets are slightly negative while Asian markets are
mixed. China has been a recent soft spot; Japan's
(INDEXNIKKEI:NI225) is now almost 7% off its lows after another
gain of 1.83% today.
Yesterday many expected the market to quiet heading into the
potentially market-moving Fed decision, but the
(INDEXSP:.INX) was able to break higher out of the wedge pattern
and downtrend that has been in place since the May 22 outside day.
The S&P broke above the 1642-1648 level and now the question is
whether we will extend above it. The next resistance level to watch
is 1658-1662 and then 1674, with the intraday high at 1687.
Fed days are often tricky as you sometimes see multiple fake-out
moves leading up to and after the decision. Many times you get the
cleaner move after 3 p.m. EDT once the chop works itself out.
Overall I do feel the market is comfortable with a scaled-down
version of QE; I think most expectations are for pace of purchase
to go from $85 billion per month down to $50-60 billion in
Tech stocks were some of the most lively over the last few
sessions, providing some opportunity even before today.
) saw a nice four-day move after putting in a higher low on
Thursday last week. The stock broke above our listed buy price of
$891 and went as high as $900.79, closing on highs yesterday. It's
not a spot to chase up here, but I think most dips on GOOG are
buyable. At this stage, it would be healthy to see some
consolidation above $888-891 to pave the way for a potential move
back to all-time highs.
) saw nice upside follow-through yesterday as it tacked on another
1.32% and briefly break above the prior pivot high of $282.47. The
stock has room to all-time high at $284.72. AMZN has been in-play
since its potent breakout at $272 on June 7, so keep this trade on
) is flagging nicely after seeing a nice two-day up move on June
13. The stock reclaimed its 50-day MA and closed above it
yesterday, as it looks like it's setting up for another igniting
move to the upside. Above yesterday's high of $181.90 it could get
some additional buying interest.
) held above its huge gap up on Monday, showing commitment to the
move. The stock took a break yesterday but it put in a higher low
at $226.40. The longer it holds above this gap, the higher
probability we could see some additional upside momentum.
) showed relative strength on a breakout. Right now it's hard to
chase, but we could see upside follow-through above Monday's high
of $61.70. It went as high as $63.37 yesterday to clear a major
resistance level on the weekly chart. The stock has room to $65.50,
which is our first target to the upside now.
(HPQ) is setting up for a break out above $25.50 as we have
mentioned this name many times for the last few days. It had a
powerful pro gap on earnings on May 23, and has built a
constructive upper level base. Watch HPQ for a potential momentum
There are also setups and opportunities in the banks.
Goldman Sachs Group Inc
(GS) is hovering around its 8-day MA to digest the recent big move
from $137 to $168. The chart still looks good as it's holding above
the prior breakout level of $159. The longer it stays above
$162ish, the higher probability we could see it takes out the
current high of $168.20. If we get the Fed out of the way today
without any curveballs, GS could be the first one to get some
momentum as its pattern is getting tight.
(MS) is also building an upper level wedge above its 8- and 21-day
MAs. A break above $26.50ish could resolve this range to the
JPMorgan Chase & Co
(JPM) is also trading in an upper wedge with the downtrend
resistance in place since May 31. If it can get above $54.27, we
could see some additional volume and buyers step in.
Bank of America Corp
(BAC) has continued to hold higher since Thursday last week and
broke above its 8- and 21-day MA yesterday. BAC showed some
relative strength yesterday, so potentially look for continuation
above yesterday's high if the market can get through today's Fed
(C) is the laggard in this group since negative news a early last
week, and is trading in a descending channel. C is trying to build
a base above $49. A break and close above its 8- and 21-day at
around $50.30 could put it back in motion to the upside.
Wells Fargo & Co.
(WFC) has been consolidating at upper levels for the past month and
holding above its 21-day MA, showing commitment. The bank broke and
closed above its 8-day MA yesterday.
General Electric Company
(GE) broke out of the monthly consolidation on news of its new
Industrial Internet project. It closed above prior pivot high of
$24.13, showing impressive strength for a stock that often finds
its hard to make big moves. It would be healthy to see it do some
work above the breakout level of $23.95. Look for continuation
Tesla Motors Inc
(TSLA) announced a recall of 800 of its Model S cars, which caused
some sharp pre-market selling. The stock now looks to be bouncing
pre-market, though, as the scope and severity of the recall issue
is downplayed. Overall the stock has been acting well, and the
longer it holds up the more nervous the stubborn remaining shorts
will get. Let's see if it can go positive today and shake off the
recal. Support to watch stands at $99.20, and then down at around
$96ish. A close below $99ish could see TSLA lose some momentum.
(SCTY) is still trying to absorb some of the pressure from the
lock-up expiration. The longer it holds up, though, the more
inclined shorts could be to cover after they didn't get that
cascade lower. The key short-term support level to watch is $35, if
we close below that level it will need more time.
Metals have been trending lower most of this year.
Gold (NYSEARCA:GLD) gave you many chances to make adjustments on
its way down. The first was around $161 back on February 11, the
second was at $149ish on April 12, and now it's trying to hold
recent support around $130.50ish. That support level will be very
important going forward.
It's June and we're almost halfway done with 2013. This market
continues to reward participants on many time frames, you just have
to know yours and work on a process to get you where you want to
go. Don't focus on the fear mongers, focus on the price action.