Uncertainty Ahead Of Fed Decision...

FUNDAMENTAL ANALYSIS
Stocks and oil traded in a volatile, uncertain manner today as investors await the BIG Fed decision tomorrow (see economic calendar). Even though the Fed is widely expected to start hiking rates soon, would they do it this time round? the possible effect of such a rate hike remains highly uncertain. Could the rate hike move the US dollar up enough to bring down the speculative fever in oil? What would a rate hike when the economy is still struggling do to the economy and the market? Yes indeed, the Fed has not raised interest rates during an economic slump for longer than I have been trading and that certainly throws a new screw into the clockwork. Could that be a positive or a negative for the stock market? How would investors construe such an act? What if the Feds decided to keep rates stagnant? These are questions both professional and amateur traders are asking recently as consumer confidence sinks to a 16 years low today. Yes, you don't even need to know what consumer confidence index is to tell that a 16 year low is not a good thing. The US dollar slump has certainly caused havoc all over the world in terms of food and energy inflation, so, raising rates is certainly the way to go to solving a lot of problems. However, what would that do to an US economy that is right at the doorstep of an economic recovery? It would certainly bring down the strong export numbers we have seen in the GDP numbers so far. So much uncertainty which no econometric models could answer with any certainty.

TECHNICAL ANALYSIS
As a technical trader, I would certainly make my final decision only after receiving the real intent of investors through price charts after the Fed decision. For now, my charts are still telling me the same strong intermediate and short term downtrend, much like the one we saw back in Dec to January. The March low was also broken intraday today but isn't significant enough to justify and conclude a technical break of the March low, therefore, the March low support level is intact... at least for now. Well, there is a saying on wallstreet that "there is no such thing as a triple bottom". If the double bottom formation created by the January and March low isn't enough to rebound the market, a visit back down to these levels is more likely to be very bearish. This time round, it would coincide totally with the Fed decision. So, the chart is telling us that investors and traders are bearish and have been bearish about all that have happened over the past month and going by the principle of technical analysis, they are expected to continue to be bearish until something significant hit the wires.

Dow Technical Chart By Best FREE Charting Software, TC2007! Download Now!