Stock Market Could Rally Ahead of FED Meeting

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Next Federal Open Market Committee (FOMC) meeting on Sept. 20-21. Been doing some research and found an interesting strategy used in 1961. The FED did "Operation Twist," which means they sold short-term securities while buying longer-term debt. The goal was to flatten out the yield curve or "twist" it so that companies would have little choice but to begin investing the capital they were hoarding. Plus, they raised short-term rates as a means of attracting foreign investment to the United States. Seems a viable option to look for as a short term solution.

In the meanwhile, longer term position traders are experience volatility in a wide trading range with the phase still bearish.

SPY In the last 2 weeks since my vacation, there have been 3 accumulation days and 2 distribution days in volume. One of the distribution days was Friday, the only day of the last 2 weeks that beat the daily average. The volume slightly favors the buyers but technically, hurdles prevail. The RSI is also at an interesting place, neither overbought nor oversold-leaving room either way.  There is still a gap to fill to 120.34.

DIA Gap to fill to 113.38.

QQQ Today an accumulation day in volume. Could see 55.50 area which would retest the 50 weekly moving average as well as the 50 DMA. Pivots are neutral, which means a hold of 53.40, and watch the leading stocks to do just that, try to lead.

IWM Also an Accumulation day in volume. The chart is still negative by all means, but since early August, a trading range has been established between 64.50 and 74.00. The really patient could wait for the range to break before establishing any longer term position. For now, anticipation is for a test of the top of the range.

ETFs:

GLD Trend still intact, with closest support at 175. But overall, still in a wide trading range 170-186. Through 177 could see a quick bump to 179.17-a gap fill. Otherwise, under last week's low 174.45, look for a test of 170 and the RSI to turn to oversold before any new long entries.

SLV Tested and held the 50 DMA with today's low 38.65. If that area continues to hold, could get interesting but for now, sloppy chart and aside.

SMH**Watched this outperform the market all day before a good rally at day's end with a not so strong bullish engulfing pattern since the volume was lighter than Friday's.  Needs to clear 29.14 today and Friday's high. If it gaps higher, would watch for an opening range breakout confirm with next target 30.65 then 32.00. Since the gap higher on September 7^th, the gap has held. Would love to see the semiconductors lead. Like IWM, in a wide range, but once it busts above or below see the next big move to follow that break.

IYT The weak link that now has to cross above 79.45 to get going to the highs from 2 weeks ago.

XRT Never had the death cross along with the other leading sectors and groups. Should hold 43.40 to stay strong.

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