 Hello everybody. I'm Morris Pomerie. I'm the senior strategist at the Corellian Academy and What we want to do is have a quick look at the FOMC meeting that we got tonight So here's a Fed preview for you Technical forecasts and trading opportunities for the major US indices and the UK 100 within all this So let's get started the event. Well, it's the Federal Reserve interest rate decision It's at 1900 GMT C tonight. No change is expected by markets Which makes it sound like it could be a dull event But I don't think so Fed Chairman's power press conference is half an hour later And what he says is important without doubt and there's probably more coming from that than there is from the statement That is issued with the announcement at 1900 So the market backdrop well yesterday we saw some rather underwhelming CPI data. What do I mean by that? Well, the headline data came in just a slightly bit better than expected Whereas the Fed is wanting to get inflation down On Friday the previous Friday we saw stronger than expected payrolls data it seems difficult to Expect the Fed to cut rates when unemployment is at 53 year lows And unfortunately whilst it does lag slightly the payrolls data who's still not moving in the direction that the Fed wants to see it US stocks closed around 2023 highs This week and unfortunately that is also not what the Fed wants to see either because it produces a wealth effect Which pushes consumer sentiment higher and potentially spending higher which adds to inflation Market pricing of around 1% of Fed cuts in 2024 is quite aggressive The first cut is expected in May which has been pushed out from April after the CPI data So that's an issue to discuss and Fed Chairman power and other Fed speakers appear out of sync with the markets Now that's the backdrop into this. So there's two scenarios We really want to have a look at and you know, we first of all got the negative Impact for stock indices. So this is one of the some of the questions that need answering How could Disappoint by pushing back on the market pricing of rate cuts with a hundred basis points Pricing to the markets for next year. The Fed is not even discussing the interest rate cuts as far as they're telling us So the danger here is that the Fed could actually Through Powell suggest that the door is still open for further hikes That would be rather disappointing to a market that was expecting cuts in March not long ago and now Realistically moving back a little bit, but the idea is that the Fed is done But the problem is here is core inflation, which has moderated slightly is still Significantly above the Fed's 2% target core inflation That is inflation that has the volatile food and energy taken out of it and gives you this bare Minimum, but it's what the focus is at the Fed and therefore until this is back to target The Fed may not be keen to start talking about cutting rates yet So that would be a negative also for stock indices The easing of financial conditions since early November is a concern and he's making the feds mandate harder This push to drive inflation down, which is their main mandate is Really made a lot more difficult when easing financial conditions sees lower rates lower yields higher stock markets and A general risk-on feeling in the market market sentiment is strong at the moment This is not what the Fed wants to see so they could try and walk back back So in a nutshell Powell could suggest the economy is not as weak as markets to predict and indeed our pricing and that he Needs more evidence of a slowdown, which means more data to come before they make those decisions And in the meantime could leave the door open for further hikes in case there's a shock there And that would be a negative scenario for stock indices generally on a generic basis However, if we look at some of the potential positive for stock indices, then the scenarios pan out like this How would acknowledge the slowing economy and inflation is under control? That would be the first thing to look for but any mentioned the Fed rate hikes are actually done that the Doories closed of future hikes would certainly be a positive scenario for stocks going forwards He also could suggest that interest rates are restricted enough to return inflation to target now What we need to remember here is that? Not all the rate hikes we've seen have yet impacted the economy Which means there's still pressure coming down the pipe due to the lagged impact of policy moves And that means there's still pressure coming through so even if they leave rates where they are that it's going to pressure the Economy slightly, but he would believe that they have done enough with rate hikes going forwards And that could be a positive for stocks as well The issue here is that power could suggest that lagged impact of interest rates Will impact growth but not collapse growth But they can leave rates where they are and we could actually possibly engineer a soft landing within all this And that is what the market been picking up this Goldilocks scenario where you could have slightly reduced Inflation but not something that impacts and crashes growth And this is I think what's been pushing indices higher recently and that Continue if we hear this sort of commentary from Powell at this meeting Now interestingly, I think the potential reaction from the dollar could impact commodities So commodities is obviously generally priced in dollars So we could see quite a move in the dollar on some of this as well And this could actually impact related indices like the UK 100 Which as I'm sure you know a stuff full of energy mining companies and banks and I think realistically They're not really a bellwether for the UK economy But are an international bellwether for what's going on with the global economy and the dollar And I think this could actually have an impact on the UK 100 Which to be honest has been lagging rather poorly over the last well since Brexit really to be honest Particularly against US stocks. So there's a lot of questions that need answering We're going to listen to city. What power has to say The markets are going to be volatile for the first hour or so So maybe let the dust settle because there's a lot going on here And there's going to be a very choppy hour or two of trading So it's not going to be easy But there's what we're trying to do here is highlight some of the things you want to look out for If they change their tone, it will be based on these two scenarios And I hope that helps and we are really looking forward to coming back to discuss the impact of the Fed meeting at a future date So that's it for me. I'm now going to pass over to my friend Richard Agcock Who is the senior technical strategist at the Corellian Academy He's going to show you some technical set-ups into this meeting as well Excellent. Thanks very much, Mo. Good morning, everybody Today I'm going to be looking at the technical outlook ahead of the Fed and what we can anticipate with in-price activity Looking at the chance at the moment. The chance I've got as of Tuesday's close So we'll take a look at the hourly perspectives for the major US indices Now the markets that I'm looking at this morning From a technical perspective the indicators I'm going to look at we're looking at an hourly chart together with an hourly Bollinger band hourly MACD and a slow stochastic as well as these are I think what are the most interesting indicators to use within this time frame Well, the theme really for US equity markets in in particular that over the last few weeks has been Their ability to ignore over a bought and overextended upside conditions The market has continued to move higher because sentiment and trending aspects have remained to Positive and highlighting the scope for further acceleration Now the higher the market goes obviously the more it requires from the FOMC announcement To actually generate fresh sponsorship and support to continue to push towards higher levels After what has already been a very significant advance So the question obviously is that as we run into the Fed announcement The overall backdrop is still more constructive. The bias is still to the upside We've got Bollinger bands on an hourly basis We've got a confirmed uptrend bands are being big in and to widen again to highlight increasing volatility So it's difficult to stand in the way of this type of price action and this type of setup However, the higher the market goes The more potential of it being disappointed by the announcement and that that can expose and all of a sudden the market begins to Realize that overbought conditions are in place another correction is due So where does the market potentially show turning points and begin to skew what has been a positive bias to a downside Well for me the first support point for the US 500 index is the Bollinger mid average It's a rising mid average is continuing to act as a support point even when we've briefly broken below it We've rallied back above the rising average itself, which is often another positive trigger So if we start to see breaks below the mid average at 4,626.88 Would suggest a risk of a deeper sell-off beginning to occur Especially if we see this last correction low at 46.07 begin to give way which was Tuesday's low So in terms of resistance levels, we're really looking at long-term resistance perspectives So if this upside bias Continues and the potential at this stage while we're above this mid average is to do that Then the main resistance points that we're looking at are the early January highs 4,748 and then 4,817 so the overall risk I think is still These acting as an important resistance level However, any reaction that sees this break below the mid average is going to be a concern Now the similar sort of price activity is developing within the NASDAQ 100 and you can see again similar price activity with the bands themselves Widening and the MACD continuing above zero above its moving average reflecting a more positive trending bias So here again The focus would tend to be on those more significant longer term highs in terms of the resistance levels 16361 the December 23rd high from last year and then if we start to break that 16768 which is the November 22nd high But to the downside once again where would the pressure begin to build towards a more serious sell-off Well, it's the mid average that's rising through 16,288 at the moment and that would be my first focus that starts to give way and I would start to question the upside validity of the of the current move and the risk for tests of these deeper retracement Lows and recovery points now This is still a positive pattern of higher highs and higher lows or an uptrend So if we start to see first the mid average give way and then potentially the December 12th low That would start to skew the bias towards a more extended sell-off and a retest of these deeper low trades When we look at the US 30 index, this is slightly different because at Tuesday's close We failed to actually settle above the December 12th high So that is going to be the immediate resistance point at 36,615 and above that We then look at the January 5th high at 36,952 as being a more significant and stronger resistance focus So again, we still have more positive sponsorship the mid average rising through 36,475 is the first immediate support point and if that Combined with the December 12th low starts to give way Then once again, we'll be questioning the strength of this current upside move and the risk of a deeper sell-off To retest these deeper lows scored on December 11th and even the December 8th extreme so again As we go into the fomc Things from a technical perspective do look more constructive for these Indices but the risks are there and we know the levels that we need to watch Now finally, let's take a look at the uk 100 index and how that's likely to pan out as we approach the fomc Well, to be perfectly honest The uk market has underperformed The us indices fairly significantly of late and that really has continued to be the case. You can see that the recovery From the December 12th low is still below the declining Bollinger mid average and this 75 61 area Is going to be the first resistance focus for wednesday's activity and even if we do start to see that give way Tuesday's high at 76 08 is going to be an even more significant Resistance area. So again much further work needs to be done from the uk 100 index And while we're below this mid average Focus has got to be on this december 12th low at 75 40 because if that starts to give way We're then posting a more negative theme to expose these earlier december lows As more negative corrective activity begins to develop So it's certainly going to be a very interesting activity into and after the fomc As it stands at the moment the us indices do seem to display more positive trending conditions But if these first support levels start to give way then it is going to question The validity and the strength of current upside moves and we may well be entering into a more extended phase And risks turning towards deeper corrections