2:41 pm EDT:  Initial spike was down, which retraced, but was unable to go down again and take out the initial low.  This continues to be an atypical FOMC day, so we should not necessarily expect a selloff into the close.  A close above 1094 could mean the end of this correction.

11:21 am EDT:  Just after the open, ES bounced off monthly S1 at 1084.75, but subsequently traded down to yesterday’s low at 1081.00.  This was in the 1080.00 to 1082.00 support area, but we said the later in the day the ES trades there, the less likely it is to hold.  Another return to this area has a good chance of breaking support.

Some notes about trading around the FOMC Announcement:  the release is usually a few minutes after 2:15 pm and there is typically a three wave pattern–a quick spike that may last seconds to a minute, followed by a retracement, then a resumption of the move in the initial direction that lasts from 15 minutes to 45 minutes.  After that, there is usually another reversal into the close, which has been to the downside over the last year and a half.  So far, the day is not behaving like a typical FOMC day.

The Precise Take – Equities trying to maintain ahead of FOMC Announcement

Leaders Analysis:  The leaders are flat overnight, with the US Dollar still at critical resistance. 

Medium Term Analysis:  Uncertainty still looms regarding the Bernanke vote and to what extent banks will be affected by the new Volcker proposals.  With GDP on Friday, we expect volatility and a resolution of the fate of this correction. 

Trading Today:  On the morning of an FOMC Announcement day, the ES would typically be up by five points or more from the prior close; however, the ES has not been able to muster a move through closing VWAP at 1092.50.  If the seasonality holds, we should see a bullish day until after the Announcement, with downward move beginning anywhere from 2:30 pm to 3:00 pm.  As noted above, however, the day is…

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