FED will dictate and we should react to that

There’s FED today. Nothing else today. The important thing will be to see what they say about the interest rates and theres only to options:

  1. The positive: If the FED keeps making comments about NOT moving interest rates in a long time and about been patient that would make the market react positively.
  2. The negative: If the FED starts changing its speach to something that might suggest they will increase interest rates then the market will react negatively. Its important to notice that it’s not going to be necesary that the FED actually mentions a date or makes a clear change of speach, just a little change or different and the market will take it negatively.

So basically we should wait, listen and then expect a market reaction in one or other direction.

Looking at the chart we can imagine that if we have positive news the reaction of the market will be to go upwards starting  new wave which would probably end at a new maximun. Why not? At the end of the day the market hasn’t stopped making new max. after corrections. So thats what we should expect. How much would that be? Well thats difficult to predict, ill say no more than 2150 but we could stop earlier at 2140 or even 2135.

In the other hand if the FED comes with some negative news we will see the market going down. At least to the 2040 but i don’t think that would be a strong enough support to hold such a bad news. So I tend to think we will se the market hitting again the 2000 support zone. Which will be very bad news because it would be the first time in years that we stop having ‘higher highs and higher lows’, now we would not have that ‘higher low’.

S&P500 Index 17-03-2015