Posted 8:10 am PST.The most important price action in today’s intraday update is the failed breakout above yesterday’s high and the wedge top bear trend reversal. The market became always in short and there will probably be follow-through selling. Bears will sell rallies. The day will probably become a bear trend day or a trading range day. Bulls need to wait for buying pressure before buying and the first buys will probably only be scalps. It is better to look to sell. Since the upper trading range is about half the size of an average day’s range, today could form a lower trading range and become a trending trading range day. This is especially true because the tight trading range at the end of the yesterday is still a magnet.
Tomorrow is an FOMC report and this could lead to a big move up or down that could last for a month or more. Since the Emini and stock market are overbought and at resistance on the weekly chart, the report could result in a very strong bull breakout that becomes an exhaustive end of the bull trend. Alternatively, it could simply sell off without a buy climax. Finally, the Emini could break strongly to the upside and enter a stronger bull trend phase. This is unlikely since the S&P500 is in a tight bull channel and at the top of the weekly channel. A trend reversal down soon is more likely, followed by a trading range on the weekly and monthly charts.
See the weekly update for a discussion of the weekly chart.