Fed - Running out of Ammo?

It was another very interesting FOMC day today. Futures were up on the GDP numbers - the markets opened up big and never looked back. Of course, like most people, I was looking to short the opening gap, but really did not find any opportunity. I tried once and quickly gave up as the buyers were out in full force this morning. So, instead of buying, I stepped aside. We later chopped around for a while until the Fed decision came out - then things got interesting.

There was really nothing new in the FOMC statement. The rate (target) remained the same, they are buying more (lot more) distressed assets, and a comment was made regarding the 'softening of the contraction' - whatever that means. Whatever. There was a period of indecisiveness after the release, and eventually a new wave of buying drove the indexes to the January highs. This prompted some profit taking and then a selloff during the last hour of trading, but not enough to prevent some solid gains and breakouts today.

My feeling is that the FOMC really has nothing else they can do at this point to stimulate the market, and are running out of bullets. They certainly are not going to raise interest rates, and are already pouring trillions into the market and the financial institutions. But that's just my observation.

The markets are at an interesting point here. The weekly chart of the SPY is setting up as a classic stochastic sell, and there are some stiff overhead resistance levels coming up - 20MA on Weekly for SPY and 200MA Daily for QQQQ. So, it would appear a logical place for a pullback (that's longer than 2 days). But this market has been anything but logical these days.

It'll be interesting to see how the pullback (once it gets here) is handled by the bulls. I am expecting a pullback to support and then an advance to retest the current resistance levels. And I am beginning to view this market as a 'Stock Pickers' market. You can begin to see the leaders emerge and breakout, and the pretenders languish and churn sideways and even go lower.

We'll see how things develops, and like I always say, the market leads and we dance.

Good luck with your trading.