Stocks have traded flat the last few days, but the fireworks could start soon. The State of the Union address is out of the way with no major surprises and the Fed makes its policy statement today. Fed days are dangerous because of their volatility, which usually kicks in around 2PM and runs to 2:30PM. That is 15 minutes before and after the 2:15 announcement. The first dust cloud settles and a directional move sometimes starts around 3PM. The daily chart analysis for SPY remains unchanged. The medium-term trend is up as SPY holds within a tight rising channel. A channel break would argue for a correction with first support marked by broken resistance around 122. This area also marks a 50-62% retracement of the December-January advance. CCI remains in positive territory to keep momentum bullish. A move into negative territory would signal that a correction is underway.
It is a pretty big week news-wise. First, earnings season is in full swing with over 350 reports slated for this week (and next). Second, the Fed starts its two day meeting on Tuesday with its policy statement expected at 2:15PM on Wednesday. Third, there is the State of the Union speech on Tuesday night. Fourth, there will be a smattering of economic reports, including New Home Sales on Wednesday and Durable Goods on Thursday.
Key Economic Reports:
Wed - Jan 26 - 07:00 - MBA Mortgage Purchase Index
Wed - Jan 26 - 10:00 - New Home Sales
Wed - Jan 26 - 10:30 - Oil Inventories
Wed - Jan 26 - 14:15 - FOMC Rate Decision/Policy Statement
Thu - Jan 27 - 08:30 - Job Claims
Thu - Jan 27 - 08:30 - Durable Orders
Thu - Jan 27 - 10:00 - Pending Home Sales
Fri - Jan 28 - 08:30 - GDP Estimate
Fri - Jan 28 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
