We saw balanced trade ahead of the FOMC release and a brief pullback to the CHVN at 2052.25 before a move back to the VPOC just before the release. The dovish statement was well received and we had directional conviction with the breakout of balance, without much whipsawing action. Internals were strong and volume was 4.1bn shares on the NYSE. With Fed Funds forecasts for the end of this year and next slashed, the credit markets boomed and the 5 & 10 yr notes dropped to 1.38% & 1.91% respectively. There was effectively a flash crash in the dollar, with it falling 3% at one point and HFT shenanigans to blame according to Nanex.
Yesterday's breakout leaves a big spike of single prints. If we open within those single prints we may see balanced two-sided trade while the markets finds short term value. If we hold above the spike there is more chance we'll auction higher towards the all-time high. 2083.25 was the pullback low above the top of the spike. There was heavy volume between 2091-92 into the close and settle was 2092.50. There is a 4 point selling tail excess at the highs.
Overnight there's been a huge correction to the dollar move, almost reversing entirely the fall from yesterday afternoon. There's been some weakness overnight sparked by the SNB cutting growth forecasts and Greece receiving less emergency funding than requested ahead of a debt repayment tomorrow.
The ES range is currently 2086.25-2099.00, still within the upper distribution from yesterday. Jobless claims are at 7.30ct and Philly Fed Survey at 10am ct.
The most likely potential scenarios for today I think are either:
1. The market attempts to find two-sided trade, balancing in a 15-20 point range.
2. The market holds the upper distribution from yesterday and challenges the 2100 level again.
3. There is acceptance within the spike and we see a move towards the micro bull/bear breakout zone of 2072.25-74.75.
In the absence of headline risk, shorts that haven't covered yet and longs that haven't got on board will be keen to get involved on pullbacks, so will probably be just looking for long set ups today,