A New Squeeze

Headed into the FOMC Announcement, after 2pm EST today, small caps are continuing to squeeze and reverse their underperformance in recent sessions. The IWM, small cap ETF, initially ripped up through the $116.15 level above which has been acting as resistance. It will be interesting to see if buyers can maintain the strength after the Announcement, rate hike or not.

Typically, stocks tend to drift into a Fed meeting in lieu of making sharp moves the day of the announcement, leading up to it. To see a squeeze into the Fed conjures up thoughts of a "buy the rumor, sell the news" event, or perhaps and outright surge back to new highs on there S&P 500 and Nasdaq. 

Even TWTR is reversing higher, though still down more than 3% as I write this, while select commodities are flexing impressive strength. 

We have several inter-market trades we are eyeing here. But again, the reaction to the Fed should see several head-fakes before the dust initially settles.  

On the updated IWM daily chart, below, the "diamond" consolidation is still in play so long as follow-through up and down remain elusive.