The breakout out of the “tall soldiers crammed together” continued for a 4th consecutive day with what could go down as a follow through day. The SP at its peak today had added ~30 handles since the above formation was busted late last week with the catalyst today being anticipation of the FOMC meeting. (Decision comes 12:30pmET, 2pm forecasts, 2:15pm press conference).
As noted yesterday, “hopefully market doesn’t rally into that (outright QE) speculation or it sets itself up for a big disappointment”. Now that a rally day occurred, hopefully the market can handle a FOMC disappointment because of the right things going on in Europe ahead of the June 28-29 EU Leaders Summit. Gold gave no clue to outright QE coming. Simply, the hope is this move is not strictly due to the FOMC hype, but anticipation of better things ahead for Europe(banking union to start). If that’s the case any pullback should be looked at as consolidation. It is doubtful shorts would press hard ahead of European summit, so dips should be looked at as buying opportunities ahead of the summit.