The feisty bulls staged a late-day rally yesterday and according to the futures markets want to keep their party going this morning despite the FOMC meeting that begins today.  Asian markets were tepid and cautious closing mixed but mostly lower overnight.  However European markets as well as the US Futures are throwing caution to the wind with the Dow pointing to a triple point gap up.

A breach of key resistance levels in the SP-500 and the NASDAQ will occur this morning if the bullishness holds until the open.  Remember not to chase the morning gap let’s wait until we see buyer supporting the gap to avoid the dreaded pop and drop at price resistance.  Having said that if those feisty bulls want to party ahead of the FOMC lets ride along and continue to profit as they push our positions higher.  Gaps are gifts so consider taking some of those gits to the bank.

On the Calendar

We have 50 companies reporting earnings today.  Among the most notable are MIK, CHA, DSW, FDX, FNV and SCS.

Action Plan

Today begins the FOMC meeting where its largely expected that the committee will make no change in the current interest rate.  It’s normal for price action to become light and choppy as the market waits for the Fed decision but a late afternoon surge of bullishness defied the norm.  Though Asian markets closed mixed but mostly lower, European markets are currently green across the board as are the US Futures.

If the bullishness in the futures holds through open the NASDAQ and the SP-500 will open above key resistance levels.  As always, don’t chase a morning gap into price resistance because of the of possible pop and drop it can set up.  There is no rush so let’s wait and see if buyers step in after the open supporting the gap.  Honestly, I don’t understand where all this bullishness sentiment is coming from but that doesn’t matter.  My job, our job as traders is the trade the chart and if the bulls want to go up then the understanding why is not important.  We of course always have to remain vigilant watching for price action clues of profit taking or reversal prepared for that possibility.  Until then it the bulls want to party let’s continue to profit from the festivities.

Trade Wisley,

Doug