Choppy price action expected, uncertainty abounds.

Choppy price action is the norm as the market waits for the announcement.  Today could be extra challenging due to earnings reports.  Apple missed the mark yesterday which could prove difficult for the QQQ to continue it’s leadership higher.  Both the DIA and the SPY are in tight consolidation ranges not providing us directional clues just yet.  Toss in the FOMC, the Employment Situation Report on Friday along with a slew of earnings, uncertainty abounds.  As always try to avoid all the noise and emotion by staying focused on the price action.

On the Calendar

Today on the Economic Calendar we have a couple of potential stumbling blocks.  The first being the Petroleum Status Report which had shown a small improvement in supplies.  However, there was a recent story about the US, and I think Lydia have ramped up production which tosses the Status number into question.  Then, of course, have the FOMC Announcement at 2:00 PM Eastern.  I think it’s very doubtful the Fed will raise rates today if they reference more hike in the near future the market will react.  The ADP Employment is at 8:15 AM and ISM Non-MFG index come out at 10 AM.

On the earnings calendar, we continue to ramp up with more than 400 companies reporting today.  Please continue to look before leaping into a trade just before and earnings report.  Use TWLO as an example of how being uninformed can cost you a bundle!

Action Plan

FOMC days tend to be very challenging days to trade.  As a general rule, the price action is slow and choppy until the announcement, and then volatility goes wild with big up and down swings in just a few minutes.  Once the initial reaction subsides, Yellen gives a press conference stirring the pot again.  I would encourage new or struggling traders to stand aside avoiding the additional risk.

Another complication today is that APPL missed earnings yesterday afternoon.  The selling was not extreme in the post-market, but the influence of APPL can move markets if selling pick up today.  Currently, the futures are pointing to a modestly lower open.  I want to take an extra dose of caution this morning.  Perhaps the market can shake off the poor reports, but I don’t want to risk more capital until I see that in the price action.  I’m expecting choppy action until the FOMC announcement, so there is no need to rush new entry decisions.

Trade wisely.

Doug