Heading into Tuesday, one of the areas I was focused on was the commodities. Gold and silver were both showing signs of weakness heading into Monday's closing bell, leaving them "highly susceptible to rapid intraday selloffs" mid-week. Once such selloff took place immediately on Tuesday morning with prices falling sharply out of the opening bell. The remainder of the session, however, was slow as they digested the morning's decline.
Wednesday's focus will be upon the Federal Open Market Committee's announcement regarding their latest stance on interest rates. This two-day meeting began on Tuesday with the announcement due out on Wednesday afternoon.
It is common for the market to slow the day before a Fed meeting kicks off and this was seen throughout Tuesday afternoon. Recently, however, the actual announcement has not had as much of an impact on market price action as it has had in the years past. We will likely see this start to change once again towards the end of the year, but the reaction should remain relatively muted this month unless the indices climb slowly off early-morning lows ahead of the news. This would make a rapid selloff easy to accomplish. Although the market is showing some upside exhaustion, there is still room on the 60 minute charts for action either way and the intraday action leading up to the announcement will serve as better guidance than Tuesday evening's bearish congestion.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.