The markets continue their slide into the Fed meeting later Wednesday. All eyes will be focused on the comments about rates going forward. Very few analysts expect a rate hike today before the election. Never the less, traders are noticing the increase in volatility which is normal leading up to a Fed announcement.
The VIX (VXX ) has been consistently coming off its lows since last week. Nearly every day a positive day, the VXX is now 14% off its low set early last week. Traders expect this to continue into and through the elections which are held next Tuesday in the U.S.
The broad based indices remain a bit disconnected , but in the short term remain as a team, headed straight down. The S&P 500 (SPY ) has broken a very noticeable support area which has led to more selling pressure in the short term. The selling has been steady and consistent so far as we head into the Fed meeting.
The Nasdaq 100 (QQQ ) on the other hand was holding up well. Making new all time highs while the S&P 500 was pulling back was definitely noticed by traders. Since then though the Nasdaq 100 has moved in tandem with the rest of the markets, pulling back over 2.5% in the last 5 days.
In the small cap space, the Russell 2000 (IWM ) has been leading the way as is usually the case. The sell off in the IWM began way before the other markets, and continues to push past each and every short term support area. With this sell off, traders are starting to eye the counter trend play as the only, short term opportunity.
Gold (GLD ) has benefited from the recent market uncertainty with rally over 3% since our last writing. Just as the rally seems to be getting started though, traders and analysts are already pointing out the resistance area at $125. It is very likely that any move above that area would come after the Fed meeting at this point.
Lastly, Oil (USO ) continues its slide lower. Oil inventory numbers helped push oil all the way back to a short term support area. Losing over 10% in just a weeks time, oil is definitely a short term focus for traders.
