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FOMC Rate Decision And Political Games

 December 14, 2010 01:44 PM

First time over the past couple of trading sessions we have negative money flow on all intraday charts with exceptions of hourly charts where the money flow is still positive, yet it is trending towards negative area.

Anther interesting point is that today we had one of the rare trading sessions when the indexes did not advanced in the response on the US Dollar drop. Decline in the US Dollar index could be considered as fuel for bullish sentiment on the stock market, especial by taking into account that over the past 4 month the S&P 500 trend is closely opposite to the US Dollar index trend. Fact that stock market did not use US Dollar decline to move higher is actually a bearish sign.

Overall, from the technical analysis prospective, picture does not looks positive for tomorrow's trading.

I'll continue to stay on 15- and 30-min chart, yet, I would keep close eye on 5-min chart as well. If we have increase in volatility, this chart could become handy.

Tomorrow, we have FOMC meeting on rate decision. Such events are usual supported by high volatility and strong swings in both directions. Couple of last FOMC meetings (minutes) were followed by bullish sentiment for a several trading sessions. Yet, it is difficult for me to expect the same now, unless Bernanke make some positive positive announcement again... In opposite, I think we may get some negative announcement. Couple of days ago, the President used ex-President to make pressure on passing the Tax Cut Bill. Before that we had conclusion of White House economists on a possibility of double dip recession, again, with a purpose to pressure on on passing the Tax Cut Bill. I would no be surprise if tomorrow, the President uses Bernanke to create additional additional pressure... (I hate when the economy and stock market is used in political games).

Rich
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