The battle between central banks buy programs to push both the stock market and the bond market upward in order to create an illusion that the economy is doing well against the underlying intensifying global deflationary forces continues on.
The talk of helicopter money programs in Japan, Europe and the Fed has failed to rally the market in a big way, an indication the forces of deflation may begin to overwhelm central banks. NQ simply traded sideways with a small bullish bias on Friday, with the pattern expected to continue ahead of the FOMC meeting next week.
The FOMC decision could have a powerful impact on the market trend. Failure to announce an imminent increase in their current QE program and imminent launching of their helicopter money program could start to trigger the beginning of global summer selloff. It will be particularly bad for the emerging markets as the US dollar would rocket up.
If the FOMC announcement has a dovish tone and hint of more QE and helicopter money the stock market should continue to rally up in a choppy slow fashion until all the shorts has capitulated before it can begin to selloff.
Key support/resistance price level for NQ on Monday will be 4450.
-- Lower supports are 4420 and 4400
-- The next upside target above 4450 is a break above Friday's high.
