Data from the U.S. has improved by the barest of margins. The New York
Fed Consumer Survey finds inflation
expectations rising (by less than 1%) above expectations, and the ECB rate cut means lots of free cash to play with. Keep in mind we have the FOMC meeting coming up and their decisions will determine the direction of the markets for the near term. Expectations for the federal funds rate remain pretty consistent and the consensus is no change. Personally, I expect them to pay more lip service to foreign issues and reiterate data dependency. But the tone
of their message could have a huge impact on the direction of the markets, in particular with the S&P
. Moreover recession fears are still high as discussed in the attached article.
The chart on SPY
forms a near perfect bearish crab
pattern. Further, the Aroon
indicator notes we are still in a long term down trend. The OBV does show some buying pressure, though the buying volume
at present does not match selling volume
from December. Further, the RSI
is dangerously close to reflecting overbought conditions. Although the MACD
histogram is still positive, it is decreasing indicating a potential crossover in the near future. Finally, there is a growing divergence between the price and the Ichimoku cloud
portending a correction soon.
Trading idea: Don't enter a short position until you see a strong bear
candle. After this, you can place a protective stop at the high of that candle, and set a conservative price target at the first fibonacci level at $195.26, or at $192.20 or even $189.81 depending on your risk tolerance.