Markets traded higher and in a tight range for most of the day, even after the much anticipated Fed decision and press conference - an event that typically brings volatility to equities. All that came to an end at 3:30, when investors headed for the exits, and equities sold off to close in the red for the 5th consecutive session. It's possible some were looking to the Bank of Japan policy announcement tonight and wanted to take some risk off before the close. Either way, it wasn't the typical end of the day action we have been accustomed to after a Fed Statement.
The Fed voted unanimously to leave rates unchanged, and also lowered their outlook for 2017 and 2018. Most of this was expected, and likely why markets were somewhat complacent after the statement, and remained rangebound during Yellen's Q&A session. After 2pm, the Dollar, Gold, and Treasuries rose, while Oil sold off.
Some things I am watching into tomorrow:
Bank of Japan
The BOJ is set to announce it's policy tonight and they are caught between a rock and a hard place. Even if they announce some decisive policy changes, it may be met with skepticism and markets could tumble. The Brexit concerns have already dropped Japan's 10yr bond yields into record negative territory, while the Yen has strengthened. Will certainly be something that will move global markets into tomorrow.
The VIX
The Vix is up 43% over the past 5 trading sessions, and closed today back over 20. One of the most reliable reversal indicators I use is looking for the Vix to close above the upper or lower Bollinger Bands. That already happened this week and todays move puts it back inside the Bands. Would want to see the VIX open below 20.18 tomorrow and never look back or there will be a much bigger sell-off on the way:
Fed Digestion
Markets will come into Thursday looking to put an end to the the current losing streak that has seen the S&P lose 2.2%. For the second day in a row, the SPY found support around the 50 day moving average, closing right above it today. Would want to see that $207.75 area hold tomorrow, with the next support at $206.50 - a spot I would add more put protection:
Some Stocks on Watch
|
Stock Ticker |
Bull/Bear |
|
CMG |
BEAR |
|
BIDU |
BEAR |
|
NVRO |
BULL |
|
SODA |
BULL |
|
DATA |
BULL |
|
SAM |
BULL |
|
PCLN |
BEAR |
-JB