My RUT Fed Day Targets

I have no prediction of what the Fed will do today nor how the market will react to it. As a trader though I do need to estimate the up and down move so I can place my trades accordingly with low risk entries and well thought out targets. This allows me to pre-plan and exit with a profit once my target is reached.

What ever happens in the meeting, I do feel the market is charged with a lot of emotion so I think a big reaction is more probable then a wimpish one.

RUT 20 Day / 30 Minute Chart (with End of Day Targets)

RUT: HIgher Highs, Higher Lows

Looking at the 20 Day 30 Minute Chart, the RUT is rising and putting in higher highs and higher lows. The RUT consolidated today at the 50% retracement level and seems poised for new highs should there be a new buying catalyst like a Fed rate drop.

RUT 20 Day / 30 Minute Chart

RUT: Support within the Window

I recently watched a Steve Nison DVD on candlesticks and one aspect of candlestick formations that I was unfamiliar with was the notion of "windows" (gaps) being a very good short term support (or resistance) area. Thursday and Friday are a good example that we can see on the 2 day 5 minute chart of the window acting as support. In this case it's the bottom of the window.

The lesson I learned here is that a gap up (window) in a situation like this shows market strength. Although the RUT tested the window intraday, the 50% Fib level acted as support and the RUT closed up strong at the end of the day. A low risk intraday entry (Blue Dot) would have been a break of the downtrend at 812 with a stop at 811.
Target 1 would be 817.50, Target 2 $828.

RUT 2 Day 5 Minute Chart

RUT Still Looking Weak

The RUT closed down about 5 points today, but more interesting to me is that the RUT is still under the 2nd upward trendline (green), and was unable to breakout above the downward trendline (dotted red line).

The RUT may put in some more sideways movement up until the Fed Announcement, but so far the charts are looking more bearish to me than bullish. The 800 area has supported the past 2 days, but they were tested intraday which means that there is still some selling going on in those areas. The RUT Closed at the Tuesday's intraday's lows, so I'll be watch carefully tomorrow to see how we close.

For the RUT I think that holding a close above 800 is critical for the bulls. An accelerated move below 800 could easily move down quickly to 785 where it may find some support.

RUT Daily Chart

DOW Finds Some Support

The DOW has formed a nice upward trend channel over the past 8 months. As you can see, the DOW has successfully tested the trendline support and continues to move higher over the past few days.

Although the DOW closed down a few points today, in the bigger picture the chart seems to be setting up for a another leg up. A strong uptrend over the next few months could get the DOW back up to the top of the range and approach the 15,000 level.

Based on the chart, I would not be surprised if the DOW hits 14500 by year end.

DOW Daily Chart

NDX Sideways Channel

The NDX has taken refuge in an 80 point channel between 2120 and 2200 for the last 15 trading days. Today we closed smack dab in the middle of that range.

A break out of this channel might show us the direction of the next intermediate trend. The NDX will likely chop around in this range for the next 3 days leading up to the Fed, with the Fed likely providing the catalyst for a channel breakout.

Since the trend is up and the NDX has been consolidating sideways, the probabilities are for a breakout to the upside as a continuation of the trend.

NDX 20 day Hourly Chart



NDX Daily Chart

SPX in Limbo

The SPX ended the day forming a spinning top on the daily chart at the 78.6 fib level and closed slightly below yesterday's close. The SPX tried unsuccessfully to breakout of the descending trendline on the daily chart. Still lots of indicision as we're in the midst of earnings season and a few days before the Fed Meeting.

Interesting to note that 7 trading days before the Fed in Sept we also had a bit of a sell off only to become more bullish as the Fed meeting got closer. Last Thursday was also 7 days before the next Fed Meeting so it will be interesting to see how the market trades leading up to this Fed Meeting.

The next level of resistence is at the 1530 level and technically it would make sense for the market to grind up to that level the next few days prior to the Fed. I see that level as a possible pivot with the market deciding whether to pop above it or drop below it after the Fed announcement.

SPX Daily Chart:

RUT Looking Weak

The RUT is looking weak this morning as it's below the uptrend, tested and failed to stay above the downtrend and is currently losing the 50MA on the daily charts.

We'll have to see how the day ends, but for now bias is down

RUT Daily Chart

RUT Breaks The Upward Trendline

On Friday the RUT broke the short term upward trendline after giving up 3.18%.

It lost the 30, 50 and 200MA all in one day.

Next logical support is another 20 points down in the 780 area.

RUT Daily:

DOW at Trendline Support

The DOW is at trendline support on a channel I drew on the 1yr Chart. This is the same area as the 30MA. Looking for this area to support. If it doesn't then probability would be for move down movement.

DOW Daily Chart:

NDX Consolidation

The NDX has spent the week consolidating in a sideways channel between the highs and lows of last Thursday's action. I continue to watch for a breakout either above or below that level to get some guidance on the market's next move.

GOOG earnings will likely be the catalyst.

NDX Daily Chart

RUT Support

The RUT is in the process of forming two consecutive bottoming tails on the daily as it nears the upward trendline. It may turn here with good news, but technically it makes more sense to me that it would move sideways to down in order to test the trendline and 30MA.

I'll be watching that trendline closely as a close below the trendline would warn me that the momentum has changed.

RUT Daily Chart

SPX Trendline Support

The expected pullback in the SPX is currently finding it's way to the 30MA and trendline support on the daily chart.

The catalyst for a bounce could be positive GOOG earnings. Intraday trade has been mixed, but bullish early in the day in the sense that it fell and recovered.

I'll be watching this chart very carefully as a break of the trendline could signify a short term change in trend to the downside. If that happens then maybe the market chops sideways in Nov. If we hold then maybe another early Santa Claus rally for November.

SPX Daily Chart

NDX Pull Back

The NDX took a nice pull back today after JP Morgan downgraded China darling BIDU. The overbought NDX got a much needed breather and took out the lows of the last 3 days.

The NDX bounced a little at the end of the day to form a tiny bottoming tail, we'll see what tomorrow's action brings us.

NDX Daily Chart

SPX Daily Chart

The SPX had a wild 29 point range today before settling on the 100% fib level at 1555. It took out yesterday's low, but held above Tuesdays low showing that it was a mild pullback when compared to the Nasdaq. The spinning top that formed on the daily at support today tells us that we need to wait for tomorrows movement to give us a hint as to the next direction. Watch for a breach of todays high or low to show us that direction.

SPX Daily Chart

RUT At 830 Support Area

The RUT lost 10 points today and took out the lows of the last 3 days, but found support near the 830 level. This area should be good support, but if it can't hold the next fib support is about 810. There's some trend support a bit below that. The next week should show us whether the RUT decides to keep the uptrend.

In wake of the uber bullishness of the Fed Move, Labor report and Fed minutes, this pullback is technically healthy to give the index a breather before another leg up.

RUT Daily Chart

DOW Daily Chart

The Dow showed some relative strength in today's sell off and is holding a support level near the 100% fib level.

DOW Daily Chart

Internet Index Power Shift?

Since our last phone call, the Internet Index has powered from below the 100% retracement level to the 161% level (see red circle). What a move up! My take is that the lock step upward movement of GOOG and BIDU helped this explosive movement. Over the past 2 weeks the NDX owes most of it's euphoric upward movement to the Internet Index as the SOX, Software and Biotech have really been a mixed bag. These 4 sectors, Semiconductors, Biotech, Software and Internet are the strongly represented in the Nasdaq 100 so we often look to their performance to gauge the health of the NDX.

Now that the Internet Index has "kissed" the 161.8% resistance area and formed a "spinning top" at yesterday's level, we'll need to wait for the next few days price action to show us some direction.

Internet Daily Chart

Software Index Retests Support

The US Software Index fell today and found support at the old resistance level of 653. The next few day's movement should start to show use the next direction.

US Software Index Daily Chart

Biotech Index Testing Support

The Biotech Index has popped up over the last week to break above resistance but lost some ground today as it tried unsuccessfully to test the 840 support area today. Watch the next few days to see if it can hold the upward trendline (green). Bullish if it can hold it, short term bearish if it can't.

BTK (Biotech) Index Daily Chart

SOX Loses The Uptrend

Technically the Semiconductor Index broke the uptrend line yesterday, but today the break was confirmed with a convincing move down. The SOX is often a leading indicator for Nasdaq movement and today was no exception. Prior to the BIDU downgrade that formed the catalyst for todays dive, the SOX was showing weakness and put in a lower high on the 15m intraday charts today while the indices were putting in higher highs. I always have a chart of the SOX up on my screen as I like to get confirmation from the SOX whenever possible for NDX moves. I do not trade off the SOX movement, but use it on days like today as my canary in the coal mine. Take a look at the intraday 15m chart and you will see that there was weakness in the SOX today prior to bigger move down.

SOX Index Daily Chart



SOX 5 Day 15m Chart (note lower highs circled)

Going Up?

The market danced it's usual sideways step in front of an important economic data release today as we await the non-farm payroll numbers. Technically the RUT is looking strong and just seems to need a little excuse to bust out of the 830 area to retest the 850 area. Seems that the world is expecting up, we'll see how it actually plays out in the morning.

RUT Daily - poised for another up move, but will the market make it happen?