On Jan 29 FOMC confirmed what I believe is a shift in market personality. After the 2008 crash the FED came with QE. Enough was written about QE but in hindsight what QE did is limit the downside potential of stock index.
Another affect was reduced volatility for intraday traders. The last two FOMC meetings confirmed a trend of the unwinding of QE. How fast will that take place and how soon we will see the affects, I am not sure. But from a trader’s perspective, I am embracing for different type of trading, different type of market, especially when it comes to stock index futures.
From the short term perspective, I think we will see higher intraday volatility. Larger overnight swings and a more balanced shift between the short and the long side, in contrast to the limited downside moves and larger upside moves we have witnessed over the past 3 years.
Looking at a weekly chart of the mini NASDAQ 100 futures below, I see a completed 5th wave based on the Elliott Wave theory and a possible correction back to 2492 over the long term (months) and amore imminent pullback towards the 3198 (38 percent Fibonacci retracement level.)
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