US stock futures point to a sharply higher open Tuesday ahead of the Fed policy announcement this afternoon. The S&P is currently set to open near move highs, up 7-8 handles in the pre-market. US markets are tracking European counterparts higher after stronger than expected German investor expectations.
The main catalyst for today’s move appears to be the Fed announcement. Nothing new and game-changing is expected from the FOMC, but they are also unlikely to begin offering any exit strategy from the “extended period” of low rates. Gold saw a precipitous drop in late February after Chairman Bernanke appeared to rule out further quantitative easing in his testimony before Congress. While the market is surging the morning, gold is selling off fairly hard in the pre-market.
Markets had an inside day yesterday after an impressive snap back last week. Technically, digestion is always good after a big move. With the S&P opening near highs, the resistance zone stands around 1374-1378. It will be interesting to see how it unfolds today. Do we bust through and close above them today? Or can this zone act as resistance, with a post-Fed sell off? Everyone must have a plan as markets held higher yesterday and some stocks have already busted into new highs.
Disclosure: Scott Redler is long AAPL, IBM, DNKN, LNKD, ZNGA, BAC. Short SPY.