Hedge_Of_The_World

Traders Cautious Ahead of Fed Meeting

Short
AMEX:SPY   SPDR S&P 500 ETF TRUST
Global Futures are notably in the red on Wednesday ahead of the Fed's January FOMC rate decision. The US majors are trading down around 1%, with the Russell taking a beating, and down over 2%. European and Asian markets are leading the way lower, with the Dax down as much as 2.25%, and the Hang Seng down around 1.5%. Vix is being heavily bid as one might expect, we hit a high of 27.76 moments ago, and we're still looking strong at a 27 handle as we approach the open.

The dollar ( DXY ) is breaking out again, and we're currently sitting above the descending trendline, just shy of the neckline on the IHS we've been observing lately. In rates, the 10Y yield continues to lose steam, as we approach the 50 day MA at .96%. We're currently sitting just below the 21 day EMA at 1%. The Put/Call ratio is a complete disaster with historical skewness being a concrete predictor, each trading day, of contiued complacency among investors. We're hovering around 44 in pre-market trade.

Gold is down notably on the week, but holding onto recent gains - we're sitting at $1,842/oz as of 9AM. In Crypto, Bitcoin continues to take a beating, and we're back at 30K handle once again, with plenty of room to the downside. Ether is also down big on the week, and is down over 10% at $1,237. The volatility in the crypto space is very attractive, but trading with caution is the name of the game.

SPY is set to open below the upper band of the white ascending channel , which should bring the 21 day EMA into play at 377.75. If this level is captured, we may see some support, just as we've seen each previous time the bears capture this key support. However, a clear break would put the bottom of the white channel back in play and the 50 day MA around 370.

Thanks for your time today guys, I hope you enjoyed the analysis. It's shaping up to be an excited day of trade, so stay tuned as we disseminate the day's price action in our live daily play-by-play to begin shortly (link to the website in profile). Remember, expect the unexpected. Cheers, Michael.

*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY , HUV , HQD , QID .
For our live daily market analysis, visit us at http://www.hedgeoftheworld.com The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.

Comments

i am inclined to agree with you, but something tells me we will see an opposite effect...a massive push up to be contrary and clear out more shorts...then a massive push down in Feb and March...but overall, very bearish and definitely feeling same as you; it was only a matter of time
+2 Reply
Hedge_Of_The_World FibonacciDiPisa
@FibonacciDiPisa, Looks like you might be right buddy, we're melting up at the moment, as brokerages everywhere go offline to prevent further selling. Powell may surprise with some new version of dovishness, but I'm not convinced he can. Things look terrible everywhere and inflation is running hot in the housing market. Something has to change soon with policy, and it's not going to be good for risk assets.
Reply
FibonacciDiPisa Hedge_Of_The_World
@Hedge_Of_The_World, this feels like right before the housing crisis where they were giving loans to anyone who went through the door..this time, it is mass advertising of lower than ever interest rates and drive-by house appraisals...NAAIM is so far over 100 meaning people have overextended and lenders have been allowing it due to COVID...once the interest rates start going up, which is inevitable, good bye Sally...that in combination with crisis euphoria overvaluation of everything is making for a nasty setup!
+1 Reply
Hedge_Of_The_World FibonacciDiPisa
@FibonacciDiPisa, Amen brother! I'm hoping for a similar outcome in the near term. Vix 46 baby.
Reply
FibonacciDiPisa Hedge_Of_The_World
@Hedge_Of_The_World, for sure on the VIX, i was thinking even something like 60 before year's end!
+1 Reply
Hedge_Of_The_World FibonacciDiPisa
@FibonacciDiPisa, 60 is definitely possible after what we saw in March..
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FibonacciDiPisa Hedge_Of_The_World
@Hedge_Of_The_World, maybe you were spot on on this one my friend!
+1 Reply
Hedge_Of_The_World FibonacciDiPisa
@FibonacciDiPisa, Cheers buddy! If we close with Vix at 35 I'll be a happy man. Lol.
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high probability of falling towards channel support
+1 Reply
@AdamEiseman, That would make it a very happy guys night. I think we see a rejection at the 50MA (h).
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