Stocks Remain Extended Into The FOMC Meeting

Markets are back in rally mode after just 1 day of weakness yesterday as we continue to see healthy rotation through sectors support the broad indices.

It’s important to be mindful of where we are within this cycle and looking at just one measure of breadth, stocks above a moving average, in this case 10SMA, you can see we continue to hang out above the 1 standard deviation line of 77%.

The current reading is approximately 82% and notice when looking left, there clearly is room for higher (there always is), but these levels generally are not sustainable for long periods of time.

Depending on your strategy and time-frame, that can mean different things to you, but for us, we’ve reduced out of the majority of our long exposure over the past few sessions.

Just today we closed out of FedEx $FDX for a nice multi-week gain.

We do have FOMC out tomorrow, which could be the excuse for us to see some volatility, perhaps in the form of an acceleration (blow off top) higher or, the pullback in price everyone seems to be rooting for.

And of course, a non-event, no move, is always a possibility too.

In any case,  you have some time to prepare and plan accordingly.

Thanks for reading, and good luck out there.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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