I'll be very brief this morning as I'm traveling. I should be back tomorrow morning with my regular blog article.
Futures are looking a bit lower this morning as traders prepare for the FOMC announcement later this afternoon. Keep an eye on the reaction in the banking space ($DJUSBK) and in the treasury market as they will provide a technical interpretation of the Fed's comments. Below are two charts with key areas to watch as the day develops:
10 Year Treasury Yield ($TNX):
It's always important to review the bond market's reaction to any FOMC announcement. A break below 1.90% support would be very bad news for the stock market. A jump higher in the TNX would be more bullish for equities near-term.
S&P 500:
Given that the Volatility Index ($VIX) is still in the 20s, I would expect to see volatility after today's announcement. To the upside, the red arrows mark the two key levels of resistance. I will be surprised if the S&P 500 closes above its 20 day EMA because momentum is so weak. To the downside, the lows last week at 1812 marks support and the bulls do not want that level violated.
Happy trading!
Tom
