Market @ critical juncture.....

Indices are @ the mercy of fed decision on Wednesday.

IF we look @ indices, they are sitting near all time highs :

S&P 500 4.13% away from high

Dow 2.92% away from high

Nasdaq only .81% away from high

Here is the RSI picture :

Nasdaq 54.75

S&P 500 42.91

Dow 41.36

IF we look @ all indices, Nasdaq is in serious bull mode even just before fed decision, this is a very good indicator for technology stocks. 

S&P 500 is a laggard.

After 19 fed speakers trying to crush this market, it is really interesting that, technology stocks did not hear any of those 19 fed officials, and kept their composure.

SO fed will say " we have to take pre-emptive action to normalize interest rate by increasing .25%" or they will say "we need more data to see the trend"

In first case of higher interest rate, language becomes critical or Q & A explanation, IF it is one off, we are off to the races and indices may jump to new all time high in Nasdaq.......

IF fed need more data, then we will have a "relief rally"

Either way barring nasty language of more than one rate hike, indices are sitting very comfortably below highs.

From October it is Q 4, which is the strongest part of stock market, earnings for Q 3 will start with AA in week 1, earnings may surprise again with majority beating consensus.

Based on seasonality, indices will recover quickly from any fed surprise and march towards series of new all time highs.

Strongly recommend higher allocation in a well diversified portfolio, go for strong stocks with highest weighting in technology.

Good luck with your own interpretation of this TAPE and your own comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed