Which Way Wednesday: The Fed Edition
Philip Davis | Sep 17, 2014 08:07AM ET
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 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?
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)
Get The News You Want
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!
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