Midweek Trending Updates

The markets (and I mean all markets) rallied after the Fed announcements and Q&A reversing what I saw as weakness getting into the event. I closed my losing short position just before close yesterday. On hindsight I should have waited for “confirmation” of the reversal as opposed to taking the initial reversal signal as if the reversal will happen. Lesson learned and I move on. Thankfully it was a small position so not too bad.

Let’s review the trending updates starting with the major markets:

The Dow Jones just made an all-time high and the S&P 500 and NASDAQ are close. All of them look strongly bullish even though on the RSI they all also look overbought. We are at the end of year and unlikely that people will sell their winners before January. For now, all signals are for markets to go higher.

SPX Sectors

Everything is strongly bullish except for XLE which is bearish because of lower oil prices.

Commodities, Currencies, Bonds

GLD and related items recovered dramatically yesterday while the dollar and oil both fell. The trending reflects that.

Magnificent 7

They all look mostly good except for GOOGL and MSFT - the 2 giants that are fighting the AI software wars. But FNGS turned perfectly bullish and that bodes well for these stocks through the end of the year.

Strategy

Although the markets look overbought there is risk in playing for a reversal at least through the end of the year. January will be a different situation as there could be some profit taking. I do not feel too comfortable playing the long side as well due to the overbought situation. So, mostly will stay in the sidelines.