Article, Stock Market Analysis, Stock Market Internals

Current Stock Market Technicals Into the Fed

All eyes are on the Fed tomorrow which has the potential to be a market moving catalyst. I have no helpful insights into what remarks to look for from the release, but I can outline the current stock market technicals to help you create a plan for the reaction.

  • The $SPY ETF is trading around its largest pullback YTD which is a laughable 3 SPY points off highs.
  • The VIX is off YTD lows, trading north of 12 and was up about 10% on the day earlier in the session.
  • The number of S&P500 stocks trading below their 10 day moving average is hovering around 70% , which is in classic “oversold territory”. From Index Indicators:

Current Stock Market Technicals Into the Fed - The Trade Risk

  • The Russell 2000 $IWM is below all fast moving averages and has been down 7 out of the last 9 days (if today closes red).
  • Crude oil is down approximately 10% in the last week.
  • Breadth has seen it’s greatest deterioration YTD over the past week or so.
  • Longer term up-trends for the DIA, SPY, QQQs remain higher using a 10 week MA.
  • Last week’s lows around 235.70 is our upper level support reference point to pay attention to in the SPY.

We’ve successfully worked off the extreme frothy readings we ended the month of February with, and have begun the process of unwinding into a mostly sideways to down range.

Given we have some short-term oversold conditions in place, a spike in the VIX, and deterioration in breadth, it appears as though part of the risk and uncertainty of Wednesday’s meeting is already being priced into the market ahead of time.

All else being equal in a news vacuum, I would rather be positioning long around these levels for a tactical bounce, rather than aggressively pressing shorts.

Thanks for reading and good luck out there.

Oh and don’t forget, our free webinar on Using Market Regime Filters to Simplify Your Trading is next Tuesday. You can sign up here, by dropping in your e-mail.


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