All eyes on the FOMC.

With very little on the Economic Calendar and earnings season finally starting to wind down all eyes will be focused on the FOMC.  In fact, all the attention over the next 3-days will likely focus on just one man.  Jerome Powell, our new Fed Chairman.  The market has obviously expressed considerable anxiety about the prospect of additional interest rate increases.  The big unknown is will the new chairman’s feathers be dovish or hawkish?  The market hates uncertainty and consequently may react emotionally both before and just after the FOMC policy statement.  We could expect some additional wild price action during his first Press Conference as well.  Remember the market and stay irrational much longer than you and I can remain liquid.  Anything is possible so remain flexible and plan carefully for what could turn out to be very bumpy ride.

On the Calendar

To kick off this FOMC week we begin with a Fed Speaker at 9:00 AM from the Atlanta Federal Reserve Bank.  After that, all we have is three bond events to wrap of the day.

On the Earnings Calendar, we have quieted down as well with just 55 companies reporting results today.  However, just because earnings season is winding down, it doesn’t relieve from the responsibility of checking earnings dates against current holdings and stocks we are planning to purchase.

Action Plan

Friday turned out to be a choppy day of price action.  The Dow tried a couple of times to get over the big round number at 25,000 but ultimately failed to hold above it by the close of the day.  The QQQ and the SPY seemed content to chop in a small range but while the IWM bounced slightly to close the day positive.  Sadly, the SPY closed below the 50-day average raising concerns that the Bears could gain the upper hand.

As I write the morning note, the Dow Futures are decidedly bearish and currently pointing to a 130-point gap down at the open.  If the selling pressure persists, we could easily start breakings some key support levels which would encourage even more bears to plie on raising the fears about the overall market.  If there ever was a time that we need the Bull to step up it’s now.  Keep in mind that the FOMC begins its 2-day interest rate policy meeting on Tuesday with their decision released Wednesday afternoon.  The market continues to be hypersensitive about rates, and with a new Fed Chairman at the helm, tensions are high.  I’m expecting some wider ranging chop that could contain some fast price action as we wait for their decision.

Trade Wisely,

Doug