Hey Market Pilots,
Once again, the FOMC minutes were the trigger for some market action. I’m writing this Wednesday afternoon and you’ll be reading it on Thursday so the exact outcome of what I write may have to be taken with a grain of salt. Ever since the SPY touch of the Daily 50 SMA on the 11th, I have been cautioning that any bounce or move up of price will be into resistance and we should actually be prepared to retest some lows.
This time, the FOMC minutes were released during the period of time when the market was at the height of its bounce. I have told my subscribers many times in the past that the FOMC is often an excuse to move the markets in a big way. Today (9/16/2020) we were not disappointed. One other detail about the FOMC is that the major market move tends to be the day after, but the move started early with a plunk down of price in the last hour of the trading day.
None of this surprises me, which is exciting because it means I have built enough experience to generally know how the market will behave. I have also lived through enough of those day-after-the-FOMC surprises to now expect them and just sit tight.
The market decided to get the ball rolling early by having a stiff move to the downside in just the last hour of the day which helped out a few of my short positions. Now all I need are a few more days of that. Next, we need to be aware that Friday is Quad Witching and that brings its own set of learned outcomes; Mostly that the market will be in chop for the day. Not always, but usually.
Despite the potential chop, I see the SPY coming back to at least the Daily 50 SMA if not a little below it, but we will have to see what that path looks like. One of the most important tools helping me figure out this path of the market is my trusty Moxie Indicator. I have a rule that price should not be over the 50 SMA (Hourly in this example) while Moxie is below zero. This is a negative energy condition so I have been expecting SPY to fall off its Hourly 50 ever since the bounce began. Give it some time, but this should happen and we can profit from it. If you want to follow along, come join my alert service as I give a play by play during these volatile moments in time. I love to teach and my subscribers have told me how much they appreciate the education I have to share from my trading.
Over and Out,
Your Profit Pilot.