The S&P is trading in a tight range this morning with a high of 2729 and a low of 2716.00 with traders focusing solely on the Federal Reserve two-day meeting that starts today with an announcement on rates coming tomorrow afternoon at 1:00pm. Traders are fairly certain that the fed will go forward with a ¼ point raise as that is already priced in. The key here will be what they say about going forward on how many times they will actually raise rates this year. I would expect volatility to gain momentum shortly after the announcement and my advice is to watch two other markets, those being Treasuries and the yen as they often give clue on where stocks might end up going. Treasuries, in particular the two-year note, made an 8-year high in terms of yield today and that often is a telling sign that the Fed is worried about inflation and does not want to get behind the curve and often signals more rate increases are coming. Looking at the trade today, I am not expecting much but would be a buyer on dips today strictly on dollar strength vs the yen. Also, traders should watch Facebook closely as yesterday big drop weighed heavily on the all-important tech sector and will influence both the Dow and S&P for the remainder of the day. In summary, I would expect a somewhat quiet day for the remainder of the day as my feeling is that most traders are sidelined and waiting for tomorrow’s major announcement on rates.
E-mini S&P 500 Index Jun ’18 Daily Chart