It's Fed Day during a bear market and that means only one thing: volatility. Bull market Fed decisions are frequently boring with only small whipsaws, but bear markets tend to exacerbate those whipsaws by many orders of magnitude. I believe Wednesday's Fed decision and subsequent press conference will see huge moves in both directions.
What will happen? It's tough to tell, but ultimately I think we end up lower in a few days if not immediately. My best guess is illustrated in the chart, with a strong knee jerk to the upside, bumping into the downtrend line and broken neckline of a head and shoulders (on the daily chart) at 2600. I also would not be surprised to see a second scenario where we rally to resistance at 2625 or a third where we touch the downtrend line at 2650.
My downside target? Things could get ugly. As I've highlighted in my recent VXX post, the VIX isn't high enough for the damage inflicted thus far. A quick subtraction on the recently broken box on the S&P daily chart should take us down to the 2435-2450 range. I think we will find an interim bottom there provided the VIX spikes into the 30-40 range.
Things will happen fast tomorrow, so stay nimble!
What will happen? It's tough to tell, but ultimately I think we end up lower in a few days if not immediately. My best guess is illustrated in the chart, with a strong knee jerk to the upside, bumping into the downtrend line and broken neckline of a head and shoulders (on the daily chart) at 2600. I also would not be surprised to see a second scenario where we rally to resistance at 2625 or a third where we touch the downtrend line at 2650.
My downside target? Things could get ugly. As I've highlighted in my recent VXX post, the VIX isn't high enough for the damage inflicted thus far. A quick subtraction on the recently broken box on the S&P daily chart should take us down to the 2435-2450 range. I think we will find an interim bottom there provided the VIX spikes into the 30-40 range.
Things will happen fast tomorrow, so stay nimble!
Comment:
This played out as predicted. Bouncing and then falling right into the 2435-2450 range after the Fed announcement.