Waiting for the Fed

Waiting for the Fed.  After this FOMC meeting, we will likely be bidding farewell to Chairman Yellen.  As her final act, she will likely leave us with an interest rate increase.  That’s not a surprise the FOMC has been projecting that possibility for months now.  However, there is speculation she could leave us with a nasty surprise on Wednesday in response to the Tax Reform bill.  Many are thinking the FOMC could project additional interest rate increases next year as a result.  Currently, they are projecting just three.  Any additions could make for an interesting market reaction at tomorrow.  Plan accordingly.  Also, keep in mind that as the market waits for the official FOMC statement price action normally becomes light and choppy.  As we reach out for new all-time highs, it would be wise to keep that in mind as you plan the path forward.

On the Calendar

The beginning of the FOMC meeting tops the Economic Calendar today and will weigh on the mind of the market.  At 8:30 AM Eastern is the PPI report which consensus suggests will once again show an increase of 0.3%.  Food prices are also expected to show in an increase of 0.2%.   We have a couple of bond auctions mid-day and then close the calendar with the Treasury Budget at 2:00 PM.  I doubt that its any surprise that the deficit continues to rise now expected to top 134 Billion.

The Earnings Calendar indicates 28 companies will report earnings today with the majority of them coming after the bell.  Make sure you always know about and have a plan for companies you hold that are reporting.  A little effort can save you a lot!

Action Plan

Another day of record closes for the DIA and SPY as steady grind higher.  The DOW is only 600 points from that big round number of 25,000.  I suspect that’s a headline the market would like to see.  In fact, I would bet they already have the hats and t-shirts printed in anticipation.  The QQQ’s ended the day yesterday showing nice strength making a record high attempt look possible again.  The Russell decided to largely take the day off and chose not to participate in the Bull Party.

This morning the Futures are once again pointing to small gap up open.  The VIX- continues to fall and is once again approaching record low territory.  An 8-handle print is only 34 points away which is amazing to me considering the elevation of the market.  With up-trends intact on the overall market, I will continue to look for long trades with low-risk entry points.   I will also stay very focused on price action looking possible reversal points as the DIA and SPY stretch out for the all-time high print.  Keep in mind the FOMC meeting begins today and a slow, choppy market is often the result as we wait.

Trade Wisely,

Doug