Greetings Traders,

Here’s what to look for when the Federal Open Market Committee releases its policy statement at 2 p.m. today along with new economic projections. Federal Reserve Chair Janet Yellen plans to give a press conference at 2:30 p.m.

• Sticking to zero: Yellen will probably emphasize that the Fed will keep its main interest rate close to zero for at least a year even with inflation rising toward the Fed’s 2 percent goal and the job market improving faster than officials expected.
• The 6.3 percent unemployment rate is already at the top end of the range that most officials in March forecast for the end of this year.
• Similarly, the personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 1.6 percent in the year through April, a rate most officials expected at year-end. The consumer price index, a separate inflation measure, rose last month by 0.4 percent, the biggest gain since February 2013.
• Yellen will probably say “rate hikes are at least a year away”; Fed policy is likely to remain very supportive of equities.”
• Fed officials will probably lower their estimates of 2014 gross domestic product growth to account for a first-quarter contraction caused in part by harsh winter weather.
• Fed officials’ estimates for growth this year will probably fall to a range of about 2.6 percent to 2.8 percent from 2.8 percent to 3 percent in March.

 

Early S&P e-mini trade is relatively light and within a narrow 2.5 handle range in advance of FOMC Rate Decision. Expectation is for continued light morning trade until release and news conference. Below are zones to be aware of throughout the trading session:

Price continues to consolidate within the 3-Day Range following last weeks sell-down. Currently price is at top of this range at the “sell break point” (1936.00). The Prior Day High at 1935.75 will be initial resistance marker.

Scenario 1: IF price can penetrate and convert PDH, THEN upside price targets 1938 which is a micro-composite Low Volume Node (LVN), followed by 1940.75 TargetMaster Breakout Level, with extremes measuring 1942.25 – 1944.50.

Scenario 2: If price fails to break above PDH, THEN retracement back into 3-day value zone would target 1926 – 1930 overlapping VTPOC and 3D CPZ. Lower Value marked at 1924 becomes key support on any pullback.

Trade Strategy: Expectation is for relatively quiet trade in morning session with increased activity for post announcement. We’ll remain very flexible for trade at upper and lower edges of stated range as it is difficult to pinpoint specific price points as market conditions are very fluid. Simply focus on the very best and well defined Stacker’s and Premium and Discounts.

Remain Flexible…Follow Your Rules…ALWAYS USE STOPS!

Good Trading…David

Habitude Four

I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS