Stock market FOMC preview, what you should expect

FOMC is widely expect to taper bond purchase by 10 billion at today's meeting, some say we might get upside surprise, no taper, some say downside surprise, taper by 20 billion. The thing is, Bernanke never really surprise market in the past 4 years. In 2010 market expected QE2 about 600 Billion, he did exactly 600 Billion. In Sep 2011, market expected Operation Twist, he did that as well. In June 2012 market expected Operation  Twist 2, he did that as well. In  Sep 2012, market expected open ended QE, he did that as well.

So you can see he usually do what the market expected him to do, that's why I don't think we gonna get any surprise today. They key will be market reaction.

Going to this meeting,  12 out of 14 trading days were positive on S&P 500, to some extent you can say this market is overbought. That's the reason I am bearish on S&P, I think market priced in tapering, and this could be the scenario where buy on rumors sell on news.

Now look at the longer term chart below, S&P haven't test 200 days SMA for nearly a year, that's longest bull run in almost 7 years. Why I am saying that? Right now there are lots of bulls out there say S&P could hit 1900, 2000. The thing is market never react positively on monetary tightening and be greedy when other fears, be fears when others greedy. I think today's meeting could mark the beginning of a correction. I could be wrong, but the first rule of trading is preserve your capital, don't take the risk if you don't feel it right, right now I don't feel it right to take risk, remember, no trade is better than bad trade

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