DOW Opens Lower Ahead Of FED

FED Day is finally here and the U.S. indices, led by the DOW, have opened lower. For the first half-hour of trade, the DJIA DOW (-60), S&P 500 SPX (-8), and NASDAQ (-22) are all firmly in the red. At least during the early going, equities players are taking a risk-off approach ahead of the FOMC Interest Rate Decision scheduled for 2:00 PM EST.

Today’s announcements are one of the more interesting in recent memory. Following the 31 July ¼ point rate cut, the markets assumed that another ¼ point reduction in September was a certainty. As we covered yesterday, this assertion proved to be premature according to the CME FEDWatch Index.

However, today is a new day. At press time (10:00 AM EST), the CME FEDWatch is once again favoring a ¼ point cut by a margin of 70.4% to 29.6%. This is a key point, as the probability has increased from 48.5% one day ago. 

Since Monday, the uncertainty over FED policy has produced a three-day holding pattern in the DOW. Will we see a breakout today? Let’s dig into the technicals and find out.

DOW Opens Lower Ahead Of FED

The daily chart for December E-mini DOW futures pretty much sums up the situation: the markets are tight as traders take a wait-and-see approach to this afternoon’s FED announcements.

Here are two levels to watch for the remainder of the session:

• Resistance(1): All-Time Highs, 27375
• Support(1): Bollinger MP, 26663

Overview: The important thing to remember about the DOW is that it is in long, intermediate, and short-term bullish territory. Values are very near all-time highs and are in a position to move higher. This strength is in spite of the ongoing U.S./China trade war and supposedly slowing global economy. If the FOMC does decide to cut rates later today, then look for 27375 to come under fire in the very near future.