Stocks rallied hard at the open after an onslaught of economic data. The buying lasted until about the time the Federal Open Market Operations or POMO began pumping fresh new liquidity to prime dealers. Given the FOMC policy statement on Wednesday it appears many are waiting on the FOMC to release any news regarding the taper of Quantitative Easing program. Gold jump on the day as it continues to test 2013 lows, but it was the inability of the stock market to hang onto its highs of the day that certainly speaks to the hesitancy of traders ahead of the fed. Volume tracked higher throughout the session, but volume really hasn’t mattered to the market in some time. However, given the surge this morning it is likely institutions are positioning for a non-event Wednesday at 2pm. It is truly anyone’s guess what the Federal Reserve will do and for now we remain stuck in neutral.
Will the Federal Reserve policy statement get the market back on track with a new uptrend will remain to be seen. It is too hard to guess where the market is going, but if we had to guess we aren’t about to. Even if we knew what the Fed would say it does not guarantee we know where the market will head. The conventional thinking is if the Fed mentions taper we go lower. If they do not we go higher, but there aren’t any guarantees. It is why we must stick to our discipline and react accordingly to how the market reacts. Price means everything and it is what we’ll follow.
It is a positive sign we were able to lift off the most recent lows set last week. Obviously we’ll need to hold those lows and push higher. For now, we remain in a pattern of choppy markets until we get the Federal Reserve out of the way. Of course, the next Jobs report will be another hurdle and to be honest has nothing to do with how we are positioned. To many focus on the improper things and react to how they think and now how price is indicating.
What a good way to start the week for these markets as we get a decent day with volume in favor to the upside. We would certainly like for this to continue and resume the uptrend. It would be a nice way to finish off 2013. Remember to ride those winners!
