Back from Arkansas. Very fun weekend which included hold em, dancing, and singing at waffle house.
For us to be near a top, tomorrow is an important day. Tomorrow is the Fed announcement at 1:15 central time. There is any number of ways this could play out. None of them will most likely be comfortable for bears. The market is most likely to have a blow off top when a top eventually comes. We keep getting these days where we open flat and than drift in the first hour or two and than flatline the rest of the day. That is now how a top is likely to form. A top is likely to form when we are up 100 and reverse and finish down 100.
So the market can do all sorts of crazy things tomorrow but for a top to have a chance of being in the market really needs to close lower than the 1:15 announcement and ideally negative on the day. So one scenario (not saying this is likely to happen) is we are up 50 points at the Fed announcement, the market rallies hard to up 125 and than gets slammed down in the final hour on heavy volume to close negative or at least below the +50 where we are at 1:15.
Do I think what the Fed says in the announcement is that important? Not really unless they extend QE. If they extend QE it will catch me and probably others very off guard and the dollar will plummet and the stock market will take a moon shot higher.
So if what they say is not important, than how the market trades is important. If the market does sell off, it sets up perfectly for a second gut shot if the existing home sales number disappoints on Thursday like I think it will. It would be a perfect one two punch to get the momentum turned the other way.
If the Fed annoucement doesn't turn the market by the end of the day...well hello 1100 and higher