The eMini S&P futures had a breakout setup for today; this fit well with today’s release of the highly anticipated release of the minutes of the last FOMC meeting.
After yesterday’s post about the Taylor Trading Sell Short day in the eMini S&P futures (read that HERE) I got an email from a subscriber, commenting that the after all yesterday’s movement the eMinis ended with a doji (and an NR4 as it turned out.) This gave them a breakout setup for today and a potential trade opportunity for us. (See the daily chart below.)
The breakout setup dovetailed well with today’s release of the minutes from the last FOMC meeting. There is a high degree of uncertainty as to whether the Fed will raise interest rates at the December meeting and at least as much uncertainty as to whether this would be a good idea. Thus, anything in the Fed minutes to clarify their thinking could lead to a big market move.
The morning trade was positive in the S&Ps, moving above 2063.50 (Tuesday high, first upside breakout level) shortly before 11 AM and making a session high of 2066.00 around 12:30. It tailed off some ahead of 1 PM as there was some profit taking before the release.
The Fed minutes released proved to be bullish for stocks, and eMinis rallied in its wake. (Traders expect a rate hike in December; however they look for the upward trajectory to be dovishly slow.) Tuesday’s high was exceeded just after 1 PM and the 2066.00 high was taken out about five minutes later. After a pullback to test the old session high the market took off, staging a strong rally and a close near the session high, the pattern that is characteristic of a breakout day move.
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