Fed cuts disappoint stock indexes

spy1211.pngIn my brief commentary yesterday I suggested the Fed might straddle the fence and do the full 50 points on the discount rate and just do 25 on the funds rate. I think if that had happened the market might have been up today. I don’t know if the market was really disappointed with 25 on each, or if it was just that the market had already climbed in anticipation of the cut and today was just sell on the news. At least my graphic in the upper left corner describes my market sentiment accurately. I have to put a bull of some sort in the box. As you can see by the blue trend lines having crossed up indicating a bullish mode. I was kicking and screaming having to put that bull in the box. At least I found an eight second bull. The double stochastic in the lower sub-graph was overbought, but hadn’t diverged, and was still pointing up until today. Also, prices had blasted through the last fib retracement level to the upside four days ago (the upper green line) and it took out the two swing points where I drew the pink line. Today it fell right back through the pink line, which is quite bearish as it is a breakout failure of two pivots. The fact that it came back to the 50% level is of no significance. It is just a statistical oddity that prices landed there. If the blue trend indicator lines hold price and the lines stay in the bullish mode the bull will have to stay in the box. It is always possible that this is just a nasty shakeout, or a pullback within an emerging trend. The technical picture is damaged, but has not reversed back to the downside yet. So I’m still thinking in terms of buying pullbacks, at least for the next eight seconds.
q1211.pngThe etf of the Nasdaq has not had as much of a retracement back up as has the S&P. The S&P had a worse technical picture longer term, so had more to make up as it recently tested its August low, and the Nasdaq only retraced about half way to that low. So the Nasdaq now is still within the fib retracement area of the previous downleg, as you can see by the two green lines on the chart. The pink line is the swing point where this market broke out four days ago at the same point where the S&P broke out. The S&P had a double swing point, whereas the same swing point on the Nasdaq had already been taken out a few weeks ago. However, this is still a breakout failure and is bearish. As with the S&P, the double stochastic was overbought, but hadn’t turned down or diverged in time to warn of this selloff. And the blue trend indicator lines were just turning positive. As with the S&P, if this market can hold the trend positive, and hold above those blue lines, I’ll still look to trade on the long side. This is certainly a pullback, but I would need to see the double stochastic get to the lower reference lines and then cross back up before I would want to get long, and that assumes the uptrend holds of course.
Gold is forming a near perfect symmetrical triangle. It is getting almost too close to the apex, so a breakout either way should occur soon. I’ll post chart tomorrow. The US Dollar trend is just turning up from deeply oversold levels, but very short term momentum seems to be back down, so long entry might be coming if trend stays up and momentum turns back up. The last few times the trend indicator turned up there was little follow-through, and the downtrend soon resumed. It will be interesting to see if it can hold this time.

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