FOMC Day

Once again this afternoon at 2:15pm the high priests of finance will descend from their retreat above the clouds to share their visions of the future with us lowly disciples. The common expectation on the street is that the crackpipe of quantitative easing will most likely continue to make rounds in order to keep everyone in a frisky mood for buying equities.

There are good things about FOMC days – according to this paper there’s a real edge in getting positioned ahead of the announcement:

This chart plots the average cumulative one-minute return on the S&P500 index (SPX) over a three day window. The solid black line shows the average cumulative return on the SPX from 9:30 a.m. EST on the days before scheduled FOMC announcements until 4:00 p.m. on days after scheduled FOMC announcements. The dashed black line shows the cumulative return on the SPX over all other three day windows. The gray shaded areas denote the pointwise 95% condence bands around the two means, respectively. The sample period is from September 1994 through March 2011. The dashed vertical red line is set at 2:15 p.m. EST, the time when FOMC announcements were typically released during that period.

Be this as it may – it’s not my style but it’s still worth noting that the bias ahead of Fed days is heavily to the upside. Not that anyone in their right mind would bother being short ahead of the announcement.

Meanwhile the Dollar has set up permanent residence over at the woodshed. The only pertinent positive news is that our short entry thus far has been working like a charm. Of course anything can happen during FOMC days and I recommend you watch that 25-hour SMA when emotions are starting to run high. Fortunately we got a great entry so if you keep your original stop above the daily NLSL you should be in decent shape.

Our Soybeans trade is running high and may be getting ready for taking partial profits. My final target is the dropping 100-day SMA – once we touch that I’ll be out and wait for new instructions.

Corn – you subs hopefully got that memo yesterday and if you did then you should be long right now with a stop below the 100-day SMA.

Wrapping things up with silver – good long there off the 25-hour and 25-day. I’m taking partial profits as there’s double resistance looming above. Let’s see if she can pop above that NLBL and that 100-day and then we’ll talk.

As you know I hate FOMC days. No new setups for today as I don’t want you guys to get chased all over the place. I already saw some monkey business over in bond futures this morning. Tomorrow is another (and better) day.

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Cheers,