S&P Triangle and Ciena update

10 min chart that shows the symmetrical triangle that we are in.... and guess what?  The ultimate end of the triangle (the point) is...... *drum roll*  November 3rd FOMC Meeting and expected QE2 announcement isn't that a coincidence?

The Daily has basically not moved for 4 days.... today we had a nice doji candle that continues to signal indecision in the markets.   The Slow Stoch shows clearly bearish divergences that predict a breakdown in price action. The line in the sand appears to be that 20 MA that the market doesn't want to let go of.... not just yet as the Midterm elections are early next week with FOMC meeting.

Lets analysis tomorrow...

The Market mover will be the GDP number.
This is a trick situation, lets look at 3 scenarios.

Better than expectations: Good news the economy is recovering, Bad news how can the FED justify the injection of potentially 1 trillion (range from 500 billion to 2 trillion likely), More bad news, the market has already priced a massive amount of the potential QE2 into the markets already.

Worst than expectations: Bad News stimulus QE1, QE-Lite have been failures, should we attempt to do the exact same thing and progress with QE2? Markets will be forced to sell off in this case, this results in QE2 being forced to be massive, this risks a continued currency war as emerging nations realize that they have to combat the falling USD.

Exactly what the market expected: This to me is the only viable option.  However since this GDP number has been revised lower 2-3 times it is a wonder how coming in at expectations is a good thing.  But at least it will not be a major factor in the determination of the amount for QE2

Fed asks primary dealers (banks) to estimate size impact of debt purchases (QE2)
"The amounts dealers chose from were zero, $250 billion, $500 billion and $1 trillion"

An update on my options position in Ciena.
The arrows point to the days that I purchased options.  First time price was around 15.75ish and the second time was when we bounced up to test the 50 MA.  I expected the stock not to be able to recapture this remaining level of support and today was proof that picking up more options at that pivot high was a good call.  We will see how the next few weeks play out however, unless massive QE2 is announced making every market and stock rally on free liquidity then I think a likely target for this stock is $12.50 market initially and then I will gauge how it reacts to this level (bottom of a massive triangle).