The S&P 500 Index couldn't maintain its grip on positive territory, settling for a daily deficit of about 3 points, closed at 1139.78. However, the SPX remained above the key 1130 level, which served as a technical ceiling throughout the summer.
Today's market is the same pattern as usual Fed meeting, major averages made some sharp swings with the release of the statement, a big swing up followed by a big swing down. The market liked the fact that the Fed said it will take whatever measures are necessary to keep the economy from slipping further. Investors viewed that as sign that the Fed may implement further easing measures in the future if they need to. Then, the rally lost steam, as investors considered the Fed's economic outlook and the effectiveness of the possible stimulus measures.
Technically, market reached the January high 1050 Today. If you did read my prior posts on July,26 Bulls' sudden death resistance 1145-1150 and July,27 Short term flash point 1145-1150 , you should know the importance of this resistance. Today's market is a red flag to the bulls. Market go all the way to 1150, then close almost at the low of the day. Today's candlestick chart show a reverse signal, however we need to see a huge selloff day tomorrow for confirmation.
By this time, you shouldn't hold any long position, or at least trim down to 20% stocks in your portfolio. Aggressive traders should start to accumulate short or inverse ETF. I have already bought some 3x inverse ETF (SPXU) when S&P500 hit 1137 today. Just a reminder, I don't expect market will break support 1130 in a easy manner. But I am comfortable and willing to hold some short at this critical resistance combine with current short term overbought level. In the meantime, the risk reward ratio is definitely favor the bears.
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