The broad indexes will likely mark time until the Fed's rate decision at 12:30 PM followed by Forecasts at 2:00 PM and the Press Conference at 2:15 PM. The markets are expected to act violently. Import and Export Prices are on tap before the bell, and Oil Inventories hit at 10:30 AM, but all will be waiting for the main event. JOY earnings are of interest since it is a global bellwether. Yesterday, the bulls punched higher on further Fed and fiscal cliff optimism. Lower volatility fueled the upside. Leader Reid's comments took about ten handles off the SPX 1434 intraday high but the bulls recovered into the close. The VIX moved back above 15.79 at 3 PM showing the bears had renewed vigor but in the final minutes the VIX collapsed under 15.79 wanting to stay firmly in the bull's camp.
Three parameters are affecting the direction of the broad indexes currently; VIX 15.79, XLF 15.70 and RTH 44.35. All three are bullish fostering the rally move higher. If any of the three parameters cross the numbers shown, the bears will initiate selling pressure in the markets. If all three remain bullish, the bulls are cruising. The SPX is up for five days in a row, up 13 of the last 17 days, creating a one-month rally off the mid-November low. The SPX recovered all of the post-election sell off yesterday from 1433 but remains just shy of that level as today begins. If the bulls punch up thru the strong 1433 resistance, then 1441 and 1446 will be on the way. Chairman Bernanke announced QE3 Infinity in early September at 1438. Today, all traders expect QE4 but QE3 is already a failure with price not yet able to move back above 1438. Figure that one out. The two-week weakness in commodities, $CRB and $GTX, is very interesting as well, which would not be expected for such a bullish rally. Keystone is scratching his head so often there is no more hair up there.
The Fed is expected to deliver the crack cocaine today so the upside resistance for the SPX would be 1433, 1441, 1446 then 1460-1461. Obviously, the bears are looking for a surprise or disappointment, or that the markets have already priced in much of the move, the SPX is already up over 6% off the bottom one-month ago. For the SPX today, a move up thru 1433-1434, that holds, will create an upside acceleration that will print the 1441 in short order. The bears are trying to push the SPX under 1419 which would accelerate the downside to 1413, and then perhaps continued downside to 1403. A move thru 1420-1432 is sideways action. The bull-bear line in the sand is identified by SPX 1433, Euro 1.30, 10-Year Yield 1.65%. Thus, the bulls rule with a move above 1433, above 1.30 and above 1.65%. The bears rule with a move under 1433, under 1.30 and under 1.65%. The market action remains treacherous and today is simply a coin flip. The key immediate tell on broad market direction is VIX 15.79, watch it like a hawk today, it will tell you everything.