A Whisper of Negativity

The FOMC announcement set up the usual pattern: first a head fake, then a decisive (in this case, down) move. Today was no different. But contained inside the Fed document is a growing consensus that QE infinity should probably come to an end sooner rather than later. The market went

Capture

The RUT finished down -18.50 USD; AAPL already down hard, finished -11.14 USD; yesterday’s favorite, GOOG, dropped  -14.39 USD. The VIX shot up. I took profits where I could; opened some short day trades, and also took out a short position in VXX (this is a reversion to the mean trade; it took me down during the day; but my tests show that 1.5+ standard deviation moves in VXX usually return to the mean within two weeks or less).

Look for the thirty year treasury bonds to test 144 tomorrow. Although my opinion is only for engagement purposes, the RUT has clearly reached the 20 day simple moving average;Capture and it has come close enough to the lower channel to support a reversal. It is up to the bullish and their machines to reverse the whoosh.  Otherwise, as the four hour chart above shows, there is plenty of space below; still 905 looks like a natural level of support.

Stay tuned to the market always.

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