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Price & Time: S&P 500: Transparency Run Amok?

Price & Time: S&P 500: Transparency Run Amok?

Kristian Kerr, Sr. Currency Strategist

Price & Time covers key technical themes daily and can be delivered to your inbox each morning by joining the distribution list: Price & Time

Talking Points

  • S&P 500 respecting pitchfork symmetry
  • 2065 should prove pivotal

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S&P 500: Transparency Run Amok?

Price & Time: S&P 500: Transparency Run Amok?

It is finally here. Today is the day that the Federal Reserve is slated to raise interest rates for the first time in almost a decade. A lot of participants in the market have never seen one in their careers. Not surprisingly, the hype surrounding it is pretty extraordinary. Countdown clocks, incessant research notes, etc. It really makes you wonder how people ever made trading decisions in the ‘old days’ without 24/7 event coverage. I mean it was not that long ago that traders had to look at banking reserve positions in order to make a best guess at what the Fed was really up to after they met. My how times of changed. I think all this transparency will someday have incredible blowback for the Fed and other central banks, but that is a discussion for another day.

There are a few nice timing relationships converging in the S&P 500 this week. The most important include the 100% extension in time of the October 2014 – May 2015 advance and the 61.8% retracement in time of the August – November move higher. As a technician, the fact that this is all roughly coinciding with the Fed decision, makes it even more interesting, truthfully however, I am not at all sure what it means. Had stocks continued their decline into the meeting today I would be looking for a turn back up, but the 60 plus handle rally in the S&P 500 since Monday has certainly changed the picture a bit. In my view, there is now a bit extra risk that we turn back down.

The key pivot zone on the upside looks to be around 2060/65. The area marks the upper parallel of the Andrews pitchfork drawn from the November high through the mid-November low and the early December high (along with some other things). The lines from this pattern have been pretty influential over the past month as the index failed at the upper parallel a couple of weeks before heading lower and then found support at the median line on Monday right before turning up. The market clearly seems to be respecting the symmetry of the pitchfork. A daily close above 2065 (ideally with the bulk of the day’s range above) would confirm this move higher from Monday as something meaningful and likely set the stage for a more important run higher. A clear failure, on the other hand, around 2060/65 raises the probability for another attempt lower on 2000.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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