Traders should be alert that the S&P 500 (SPX.X) has broken our short-term upward trend that was put in place right after last weeks Fed rate cut. We'll now be watching our "confirmation" level to see if the bulls can keep things in check. Our "confirmation" level is right where the SPX was trading, minute before the Fed rate cut.
S&P 500 Index Chart - 60-minute interval.
Level (C ) now becomes a key level of "confirmation" for the breaking of our upward trend (B). Time and time again we see rallies sold. Is the SPX stronger today than it was on January 3rd, right after the Fed rate cut? If it is, level (C) should hold at 1,274. We'd suspect some bearish traders that didn't like the Fed rate cut or didn't factor it into their trading plans will be doing some covering at current levels. There will also be bearish traders sitting on their hands, looking to see if 1,274 holds.
S&P 500 Index Supply/Demand Chart - 5-point scale.
"The circle gets the square" as supply (selling) continues to drive the SPX.X lower. Today's action (red O's) is a step-by- step approach to tracking the SPX on a supply/demand chart. First sign of trouble here is a trade at 1,270. Our "count column" is used for traders to help assess risk/reward in their current trading scenarios and indicates a bullish price objective of 1,500. Are there any institutions out there willing to risk $10 to potentially make $220? If so traders will be looking for signs of a reversal! If not, one should be concerned as to "why not". Is there something they "know" that the market is yet to learn?
NASDAQ Composite Index Chart - 60-minute interval.
The NASDAQ Composite is holding on to gains that were found just after the Fed's rate cut on January 3rd. The "Fed giveth, but the market tooketh away". We've said it before..."It's a traders market!"