This will be my last post in the "expanded commentary" I provided around the elections and the Fed announcement. I only made so many posts because it was an event that garnered a lot of attention from traders, and I was interested in how it played out. From now on, expect only a post at the market close for next day odds.
Based on action in the futures, the Dow should press new highs for the year at the open today, which, in my mind, is the final confirmation for the bulls that the rally will press on. I'm kind of stating the obvious, but I might as well make it official. I believe that the Dow leads the market, and new highs on the Dow will eventually lead to new highs in the S&P. That doesn't make the market a good buy at the open today or even in the next few days, but it should provide at least another 10-20 handles in the S&P over the intermediate term, regardless of any pullback that could lie ahead. Anyone who is long can rest easy. Anyone who is short has to decide whether they want to take losses and wait for some trend change signals to short (or hedge at the least), since it clearly did not happen here. From there on, you can look to other analysts to figure out how high it can go, although I've heard 1242 as a potential target that kind of makes sense to me.
Sell the news also failed to produce a trend change. It still has a shot a producing a near-term pullback, but even that seems unlikely at this point. My short article on "Fade the Fed" seems kind of funny in retrospect. While I believe it is probably true in the long run, if you are interested in short-term market timing, then it is absolutely not looking like the right time to Fade the Fed. The question is how high they can take it, and at this point, it appears the answer is simple: higher.
Follow Up: In terms of the odds I posted yesterday, I should still warn anyone who is long that the odds favored a low today below 0%, implying that today's gap could fill. I can't guarantee that, but that's what the odds suggest. If you're short, at least wait for a few hours to see if the market begins filling the gap since the gap could still fill. The way I personally tell whether a day will trend or break lower is based on advancing/declining volume. If the second hour produces lower advancing volume then the first hour, then the market is unlikely to trend. If it produces higher advancing volume, then it will probably trend.