SPX -- Daily

With the variety of fundamental crosscurrents in play over the past couple of months, I have been
letting the technicals serve as the guide to the market short term. I cashed out of stocks on Nov. 2
and in posts on 11/9 and 11/20 I cautioned about the failure of the SPX at resistance at 2100. I even
conjectured that with failure to breakthrough resistance, the SPX could fall into the high 1900's. We
are getting close to that area now. SPX Daily

The SPX has been trending down since early Nov. from a powerful short term overbought and is
now heading into oversold territory and could well have further to go. Now, market fundamentals
are set to return to the fore right ahead as the Fed's FOMC decides whether to raise short term
rates at its meeting over next Tues. - Wed. as it has been almost unambiguously hinting. If They
go ahead and do it, the increase will come with the strong suggestion that an eventuating uptrend
will be mild and gradual and that short rates could be allowed to fall subsequently if circumstances
warrant. If this is the correct scenario, players will have the next week or so to sort out further
how much risk each feels is appropriate in a tighter monetary environment which features rates still
at historically low levels. If the Fed decides at this meeting that It does not want to push up short
rates, then investors will have to sort out the Fed's 'take' on the outlook. Certainly, the Fed would
look silly if It postpones the decision and implies "well, may at the end of Jan. '16 we'll look at
it again".

I have never seen much value in trying to psyche out the Fed. I do not see a good case for raising
short rates, but all of us will have to play it as it lays next week.