It May be Bounce Time

I close out my bearish short positions today in TZA and XLF.  I may go short again tomorrow, but for now it looks like this market is getting set for some kind of an upside bounce on the Fed decision.  It could flip either way at this point, but the decline so far has been really labored and slow.

On the 60 minute charts there are small falling wedge formations which shows a slowing of bearishness.  But clearly what ever comes out of the Fed tomorrow is going to move the markets big time regardless of what the technicals are saying right now.  I just have this feeling they are not going to take the punch bowl away yet tomorrow and just give the normal standard ‘we won’t raise rates any time soon’ sort of message which could send the market higher in a huge short covering rally.  Whether that short covering rally holds by end of day is another story.

The gold price is sort of telegraphing that right now blasting higher to new all time highs.  It is saying to me that the Fed tomorrow is going to pamper the markets again.

I can tell you plenty of reasons why the US Dollar should get a huge upside pop tomorrow, because it is sitting right near the apex of this huge falling wedge.  But falling wedges can fail too even though most of the time they are reliable.

Pretty much everything seems hinged on tomorrows tape action and it is probably prudent to be on the sidelines until a couple minutes before the close of market tomorrow because I think things will be very wild and up and down all over the place.  But a couple minutes before the close tomorrow should give the real indication of where we go near term and into next week.

Posted in Gold Market, Market Timing, SP500
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