The market is looking past tapering and is now firmly fixating itself on the triggers that will push the Fed into hiking the funds rate; from what we are seeing this could materialise in late 2015.
Price action in all asset classes post the Fed statement was wild, but ultimately equities saw solid gains right from the get-go.
It’s worth looking more short term at the 240 minute or hourly charts, and the technical picture here is much more compelling and certainly favouring long positions.
On the hourly chart, there is good supply that comes in at 5158, and a break of this level could see 5184 come into play. The RSI is at 70.8; however I would look at this as a sign of short-term strength, rather than the index being overbought. The MACD (output line) is clearly above the signal line and this suggests pullbacks should be contained.
Personally (I don’t have a position myself), I would be using any pullbacks on the market to 5130 to 5140 to buy the Australia 200 cash, with a potential stop at 5075 (as seen on the chart), for a move to 5180.
It’s all about the banks today and whether we can see solid gains in this sub-sector. We will need to see Asian markets rally as well, which could boost US futures through the day.
Looking at the daily chart though, I really want to see the MACD trade through the signal line, for a higher conviction here.