Markets Open Flat Post-FOMC Minutes

Posted Thursday, February 21, 2019 by
Shain Vernier • 2 min read

Wednesday’s FOMC Minutes release has brought more confusion to the U.S. indices. As a result, today’s Wall Street open featured slight losses in the DJIA(-50), S&P 500 SPX (-6), and NASDAQ(-20). However, things can change and these markets are poised to break out.

During the U.S. pre-market, there were a few secondary economic events worthy of note. A quick look at the hard data:

Event                                                          Actual       Projected    Previous

Continuing Jobless Claims (Feb. 8)        1.725M          1.740M       1.780M

Initial Jobless Claims (Feb. 15)                 216K             229K             239K

Durable Goods (Jan.)                                  1.2%              1.5%             1.0%

Philadelphia FED Survey (Feb.)                 -4.1                14.0               17.0

This group of reports is mixed. The U.S. jobs market remains strong but manufacturing numbers are subpar. Lagging performance in the Philadelphia FED is not a good sign for economic growth, an issue that will come to the forefront as the Q1 GDP release approaches.

The FOMC Minutes Have Muddied The Waters

The markets were eagerly awaiting Wednesday’s FOMC Minutes, as it was to provide the first look at FED policy for 2019. We didn’t get a whole lot of answers. Stated policy remains dovish, but there is dissent among FOMC members on when ― or if ― rate tightening will be necessary during 2019. Subsequently, compression for the U.S. indices has become the order of the day.

March E-mini NASDAQ Futures (NQ), Daily Chart
March E-mini NASDAQ Futures (NQ), Daily Chart

Here are two support levels to watch for the March E-mini NASDAQ:

  • Support(1): Bollinger MP, 6908.25
  • Support(2): Daily SMA, 6846.50

Bottom Line: At press time, it looks like the indices are moving toward the bear. However, price action remains choppy and daily compression is evident. In the event early selling gains steam, going long from just above the Bollinger MP in the March E-mini NASDAQ isn’t a bad way to play the action. For the rest of the session, I will have buy orders queued up from 6909.25. With an initial stop at 6904.25, this trade returns 20 ticks on a 1:1 risk vs reward management plan.

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