Market Has A Small Speedbump Today – FOMC Minutes Will Be Hawkish

Posted 9:30 AM ET - Bullish speculators have been flushed out and the bid is building. The FOMC minutes this afternoon could provide a headwind. The Fed wants to tighten and they will start reducing the balance sheet in September. We might see a little nervous trading today, but stocks will gradually recover Thursday and Friday. Earnings season is winding down, the economic news is light, the Fed is in recess, politicians are on holiday and traders are taking time off. These are the summer doldrums and they will continue through Labor Day The next rally should hit resistance at the all-time high and the market will struggle to breakout. In a few weeks I expect to see signs of profit-taking. The debt ceiling and another round of tightening will spook investors. Swing traders should have sold a few out of the money bullish put spreads on Monday (buy back the spread if the stock breaches technical support). Stay sidelined for the next two weeks and watch for signs of resistance. Late day selling with follow through the next morning will be a warning - especially if we see a reversal off of a new high. Day traders need to tread cautiously. I will trade from the long side today, but I won't be very active. I am more aggressive on days when the market gaps down and I am relatively inactive when the market opens higher. The early move will stall today and traders will wait for the FOMC minutes. Support is at SPY $246 and QQQ $143. Resistance is at the all-time high. . .

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