Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Which Way Wednesday: The Fed Edition

Published 09/17/2014, 08:07 AM
Updated 07/09/2023, 06:31 AM

And wow, what complete and utter BS it is. They NYSE is still below 11,000 (our Must Hold line) and the Russell is still below it's 50 dma and we up on less than 10% of the volume (total) that sold off for the last two weeks.  But, who cares as long as it paints a pretty picture?  

We can thank the Wall Street Journal's Fed Whisperer, John Hilsenrath with yesterday's rally as he wrote not one but TWO  articles that whipped traders into a frenzy on his "insider view" that the Fed "may keep the words "considerable time" in its policy statement."  Oh, be still my heart!  More free money?  Really?  Will wonders never cease?  

Levels Charts

Needless to say we took the opportunity to re-short the Dow Futures (YM) at 17,050 and the S&P Futures (/ES) at 1,993 and the Nasdaq Futures (/NQ) at 4,060 and the Nikkei Futures (NKD) at 15,950.

We also got a chance to short oil at $95 again (a level I published in yesterday's post) and we're thrilled with that and already this morning, it's back at $94.50 for $500 per contract gains.  For non-futures players we grabbed the SCO Sept $30s at .25 as a fun play that inventories at 10:30 won't support $95 oil in much the way Fed policies at 2pm won't support these market levels.  In fact, here's CNBC's Art Cashin telling you yesterday evening what I told you yesterday morning – BRILLIANT!  

Art's actually one of the very few Wall Street analysts I respect, I've followed him since I was a kid – he's a fantastic guy.  As you can see on the Big Chart, the Russell is the laggard and, if the indexes break higher – it's the index we'll go long on but our short bets (TZA) have already paid off very well.  We like them long over 1,145 if the above levels are all over because there is very little upside resistance on TF, all the way back to 1,200.  On the other hand, a break below 1,140 (-5% on the Big Chart) that sticks is likely to be tragic

Today we'll be watching our bounce lines (per the 5% Rule™), which are in play all week and it's been a mixed bag so far with:

  • Dow 16,980 (weak) and 17,010 (strong) 
  • S&P 1,985 (weak) and 1,990 (strong) 
  • NASDAQ 4,560 (weak) and 4,570 (strong) 
  • NYSE 10,950 (weak) and 11,000 (strong) 
  • Russell 1,160 (weak) and 1,170 (strong)

TNA

In order for us to get bullish again, we want to see NO weak bounces and 4 of 5 of the strong bounce lines taken back.  The Nasdaq is at 4,553 and the NYSE is at 10,980 so, if they can cross their next goals, we'll be happy to go long on the Russell at 1,145 (TF) and we can also play that with TNA (ultra-long Russell), where the weekly $71.50s have very little premium at $1.80 - considering that TNA ($72.42) popped 0.60 yesterday with the Russell up just 0.4%.  A 1% move up in the Russell should be a 50% gain on those calls!  

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.