It looks like another gap up this morning and I am not sure what the chances of a fill are on a Fed Thursday, but my strategy will be to buy the fill (or close) and not short the gap. There just seems to be too much bearishness and my guess is the markets are due for a rally. The recent Investors Intelligence survey out yesterday had this information:

"Pessimism about U.S. stocks rose to the highest level since October 2002 on concerns that higher interest rates will derail economic growth. The last time investors had this bleak an outlook, the SPX dropped to a five year low and then began a new bull market."

If you look at the charts, the markets bottomed in October of 2002, retested in March and took off from that point.

Today we have the Fed giving their final answers at 2:15 and my guess is that no matter what they say, the markets will rally. In my opinion, the bad news is baked in and all the hedge funds who had investments in high flying securities that swooned over the last 6 or 7 weeks who received redemption notices have sold alleviating further selling pressure.

The 200 day SMA of 1260 on the SPX will provide temporary resistance, but if we can get past that point it will then provide some pretty solid support.

I know that this all sounds like quite a scenario, but one needs to try to identify where the markets is going rather that look at where it stands presently.


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