SPYing For Clarity in the Short Term Noise Before the FOMC

• Posted by Greg Harmon
• on December 8th, 2015

Last week ended with a strong non farm payroll report. The unemployment rate held steady and there were over 200,000 jobs added. Fed governors did a lot of talking. The ECB extended their QE program. There was a lot of news for the market to absorb. This week there is basically nothing to be revealed in the way of data. But then next week the FOMC meeting takes place and the market is anticipating a rate hike for the first time in many traders lifetimes.

So what happens when there is this void of data after a barrage and before the main event? Well in a sporting event this happens all the time. Between innings, periods or quarters. It can be called halftime. It is when you go make a sandwich when watching at home, or get a beer and hot dog if you are lucky enough to be there in person. You take your eye off of the game.

This is what most people should be doing with the market right now. Waiting for the main event. It will come soon enough. The movements in these time periods tend to be exaggerated, not by the market, but by those describing it. Understand that if you are going to be involved over the next week.

Yes there are ways to trade it if you are glued to your screen and have cat like reflexes. And as patterns are fractal in their nature, signals to follow, like the bearish Bat harmonic above. But realize that now, the field of particpants has dwindled to be even more focused on the professionals. Are you a professional trader?

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