Trading While Working: 1/28/2014

As expected, the S&P and the Dow (and pretty much all other US indices) rose moderately on Tuesday. I am surprised to see that the flags I drew on yesterday's posts look like they should be pennants/triangles at this point. However, the gains were weak today and Wednesday is bound to bring drama via FOMC minutes. This, coupled with lower volume from Tuesday, has me thinking the market is waiting to react to the impending remarks about US monetary policy.

Wednesday could see a big rally to 1815, but the next upper fib level from October 2013 is around 1800-1802. This may or may not give the bulls trouble on Wednesday. While there seems to be minor resistance in the 1795 area, a break above it is likely tomorrow.

I'm still using the horizontal supports of 1760 for S&P and 15,700 for the Dow. The completion of what looks like a bear flag should culminate in a drop below these levels, at least to the 1740's on the S&P.

While it does appear the FOMC minutes will be used as an excuse to rally, there are rumors of removing another $10 billion of QE per month. This has the potential to swing the market in either direction, so Wednesday could be more of a toss up than some realize. I really dislike speaking too much to news/policy events and their effects on markets, but the fact has been that these Fed days are prone to light-speed swings, around which I would exercise caution.

S&P 500 Daily Chart