Today’s column was written while the market waited for the FOMC’s interest rate decision.  For those who aren’t market junkies like me, the committee decided to leave interest rates untouched.  More importantly, they also dropped their tightening bias, which caused the market to lurch forward.  But they added some language about remaining concerned about inflation failing to moderate as expected.  I used the term “thread the needle” in today’s column and it appears that this is what the Fed accomplished.

Given the market’s impression that an interest rate cut is now on the table, we saw a rally that lifted stocks above key technical resistance that I identified as a must for the short-term rally to continue.

The Nasdaq 100 and S&P 500 Indices have now taken out their respective 50-day and 100-day moving averages, signaling that upside potential is growing.  Similarly, the Dow Jones Industrial Average broke above its 50-day moving average, though it found some resistance at its 100-day (see chart below).

While the market remains at risk of some selling, the combination of pessimistic sentiment (see last week’s essay) and improving technicals should provide investors with a short-term bullish opportunity.

NULL
NULL