Stocks ended slightly higher yesterday after giving up some decent gains. It traded as high as 4,325 points to be one point below the 200-day moving average, which must have prompted some of the selling they were expecting. The index fell sharply, turning negative for a while. However, the index stabilized around 4,290, but closed up 19 basis points at 4,305.
Along with the 200 day moving average there is a major bearish and the RSI is now above 73. The technicals are very overbought and at this point I’m just waiting for the 10-day exponential moving average to break and when it does, I think. the after sale will be very strong.
Again, I still think we see the 3,950 region at the , which would now be the 61.8%.
Today will be important as options expire at 9 AM EST and the VIX should move cheaper. Then at 2 PM EST there will be a release from the FOMC that should receive equal attention.
The FOMC minutes were typically a sell-in event. It could always be different, but the maximum of easy monetary policy seems to have already been balanced, so it’s hard for me to imagine that the minutes could even be dovish. If history repeats itself, today could be a pivot, not for the Fed, but for stock prices.
Daily chart of the SPDR S&P 50 ETF
There are already parts of the equity market that seem to have stalled. The ARK Innovation ETF (NYSE: ) peaked on August 10 and was unable to participate in this rally. The RSI is very close to breaking out of its uptrend, indicating that the bullish trend is over.
Advanced Micro Devices (NASDAQ: ) has not participated in this rally and has been stuck around $100 for a few days. So far, the 10-day exponential moving average has supported AMD. I expect that support to break and the stock to turn lower and return to $85.40.
ServiceNow (NYSE:) has tried to break out and has so far failed at the top of its trading channel.
Meanwhile, it continues to move closer as its price and RSI approach their respective upswings. This could be important because if Bitcoin breaks, it could work to send a signal of risk in general in the markets.
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