We saw a big jump in volume today despite the lack of movement from the market. Small caps continue to trade sluggishly as the index was the only major index to close in the red. Tomorrow’s Fed statement will be closely watched by majority of the market participants. Will the central bank hint at a June rate hike? Will they cease rolling over maturing holdings? We haven’t the slightest clue what they will or will not do. We are not about to guess either as it is a futile endeavor. We’ll stick to price action and managing our risk. Many will be looking for a pullback as we have run so far since last week while we simply manage our exits and continue to be long this market. This is all we can control.
The conventional thinking here is going to be stocks will pull back simply because we are “overbought.” This very well may be the case and we’ll see a sell-off post the Federal Reserve statement. Maybe the market will frown upon the central bank not reinvesting its maturing holdings. Who knows for sure? What we do know is we are in an uptrend and this market does a great job fooling the masses. It will go against conventional thinking and we might see a huge move to the upside tomorrow. Please, do not take this as a prediction of what might happen. We have our stops in place and are ready for whatever tomorrow will bring.
It does appear a June hike is in the cards according to what the market is predicting. Current odds of a hike are:
Crude oil continues to fade and still cannot hang on to $50 a barrel. We are sure there is likely a perfectly good reason as to why crude is having a tough time, but all we know is the commodity remains in its current range. XLE continues to slide lower as crude is unable to break above its current resistance.
Let’s see how this market handles the Fed after the open market committee releases its policy statement. We have our stops in place and are ready for anything.
