the Fed will complete the latest policy meeting and announce a widely anticipated no change to interest rates. The real focus will be centered on the accompanying statement that could yield a variety of outcomes to future policy. The Fed is expected to acknowledge economic weakness, but what the Fed plans to do to counter that economic weakness will be the kicker. Will a possible $1T in US treasury purchases be waiting in the wings if economic data is to soften in the future? Will the Fed counter coming economic weakness with talk of further accommodative policy for an extended period of time? All these questions need to be answered to give the market much needed guidance.
However, the market feel over the past 3-5 sessions is suggestive that risk-bears have gone into hibernation in early Fall and are prepared to join the risk-on parade. My preferred wave counts have changed and the alternate counts kick in. They disagree with a new rally in risk and will do so until key levels are broken. The S&P faces monster resistance at around 1155, as the US 10 yr yield still remains below 2.8%. The USDX is still trading above 80.80 support, where as EURUSD is continued below 1.3200 support. Oil is 1.15% lower on the session as copper futures are still below $350/ton. My updated wave count in EURUSD shows a possible A-B-C correction pending completion at 1.3200. We have had very good success fading major economic data into key technical levels over the past month , so with light size we will do so again. I am selling 1 unit of EURSUD at 1.3175, another unit at 1.3200, and will stop out for both units at 1.3240. My concern is if we are triggered short, but the S&P is still considerably away from 1155 resistance. If this occurs, I will likely cut a portion of my short EURUSD and allow the S&P to move higher. If they occur at the same time, I will have greater conviction in this trade.
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