S&P 500: Sharply Unchanged, Consolidating Or Topping?

Recently we have been discussing reasons why the market is ripe for a decline – high levels of complacency, waning breadth, and a propensity for the market to pullback not long after record highs – but thus far that has meant nothing. (For details, read here.) And while the market has yet to decline, it has also failed to make any sustainable headway. On Friday, another attempt to break to higher ground was met with sellers.

All of this price action during the past couple of weeks has resulted in a big net zero effect in either direction. Is it a consolidation for another thrust higher, or a ‘slow-roll’ which will eventually result in a downdraft? Well, given nothing has really changed in terms of market conditions, we still lean towards the latter.

However, until a sustained move above resistance in the 2174/78 vicinity or below the 2160/55 support zone is achieved, the S&P is left to drift. The market we are faced with today is difficult for both the swing trader and intra-day trader, which makes it especially important we keep our powder dry for better days of trading.

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Today kicks off the two-day FOMC meeting; tomorrow will hold the decision on rates and release of policy statement at 18:00 GMT. There are no expectations of the Fed moving away from 0.50%, so the market’s attention will be on any language changes in the statement. It would seem likely this will be a low volatility meeting, however, we should always be on our toes just in case.