Price action is decisive but support holds.

It was encouraging to see positive price action and the DIA, SPY, and IWM holding price supports.  Even the technically damaged QQQ managed to stave off additional selling.  Price action, however, proved to be very two-sided and whippy.  As a result, the markets left behind indecisive patterns that will keep me on the side of caution.  The market faces a massive data dump tomorrow as well as a rate decision from the FOMC.   Don’t be surprised if we continue to see choppy price action and indecisiveness today.

On the Calendar

Today begins the FOMC meeting that culminates tomorrow afternoon with their decision on interest rates and Yellen’s Press Conference.  Also on the calendar today it’s the Producer Price Index (PPI) at 8:30 AM Eastern and a Fed speaker at 1:45 PM.  PPI rebounded slightly in April, but services remained weak pointing to a concern of demand weakness.  Consensus sees the number increasing by 0.1% with food and energy at 0.2%.

On the Earnings Calendar, we have 32 companies reporting today.  I don’t see any potential market moving earnings reports, but it is always wise to check your holdings and new purchases for reporting dates.

Action Plan

With the FOMC rate decision looming I think could see a lot of chop and whippy price action as we wait.  Odds of a rate increase are running in high 90’s percentile.  As of right now, the overall market seems to be taking the likely rate increase in stride showing fell ill effects.  The four major indexes held up better than I would have expected after Fridays surprise tech sector selloff.

Futures are currently pointing to a slightly bullish open and except for the technical damage in the QQQ overall the market remains bullish.  However, there is a huge wave of data coming at on Wednesday, and I feel the need to remain quite cautious when considering new risk.  I will not rule out adding new positions today but keep them smaller than normal, and I will need to see the Bulls showing better commitment overall.  Choppy anemic price action just won’t get it done.

Trade Wisely,

Doug