After a quiet overnight session, the market opened to the downside, stabilzed and waited for the FED announcement. At 2:15 PM the FED raised rates for the 14th time in a row, but changed the wording on their statement from rates are most ‘likely’ to rise, to rates ‘may’ rise in the future. Which was basically stating they were done with the regular increases. Good news?
At first the market rallied, then sold off to new lows for the day in the ES, but the NQ held. Then the market staged a broad rally, to make new highs for the day, with the TRANsports and the NYA making new yearly highs. At 3PM selling came into the market, and it drifted down into the close. At that point is was an okay day. Then, 5 minutes after the close, Google announced their year end earnings report. They bombed! And so did the futures within seconds, dropping 20 points in the NQ (NDX).
Now, we all fully know that the futures market can be volatile overnight. And, this 20 point slide after hours, may dissipate before the open tomorrow. If it doesn’t, however, it could mark the end of this recent rally, and the markets recent attempt at new highs, as the impact of todays close in the futures market, could ripple around the world. The NIKK and the FTSE, for instance, could turn down from their recent highs, as they are in the fifth wave of their intermediate uptrend. At home, the SOX index may have posted its intermediate term high, as five waves can be counted up from the Oct lows. The TRANsports remain positive.
Our four major indices: NAZ/NDX/SPX/DOW made new highs in Jan, unconfirmed by new highs in the MMI. Anticipating a potential extension of the impulse wave into a three of three, I was uncomfortable with the seven days of selling after the rally. However, since it did not violate any major support areas, I continued a neutral position on the intermediate term trend, (which is still up), and was relatively positive short term. The market did rally about 3%, and could still continue to rally from here.
There is also the potential, that this recent rally was just a B wave in an overall ABC correction from the recent Jan highs, that would correct the impulse wave up from the October lows. The C waves in this bull market have been known to be fairly steep. Personally I plan on riding out this market, either way, with my current positions. We are still in a bull market! For now, I am leaving my counts as they are in the four indices, until, if and when, NDX 1694 is penetrated on the downside. That, to me, would confirm that this was a B wave rally, and the market is now in the process of correcting the impulse wave from the Oct – Jan. I have had this possible count, and the a more bullish one, posted on the charts for two weeks now, waiting for the market to resolve the situation. We will probably have the answer by tomorrow. Best to your day!
INTERMEDIATE TERM: NEUTRAL
LONG TERM: BULLISH