STOCKS: Trend Might be up but Techs are Overbought & the Fed is a Threat

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Chart-595Global equity markets were mixed overnight but the markets with positive action were just barely trading in positive ground. US shares were also showing some positive action in the wake of mostly positive international economic readings. With US measures in the early going today still sitting within close proximity of yesterday’s highs it would seem like investors are attempting to look beyond the Fed decision later today. It is also possible that traders and investors are expecting positive US economic readings and the belief that the Fed will be 1 and done after this afternoon’s meeting. Earnings announcements will include Joy Global before the Wall Street open.

S&P 500: After a large outsized gain in the prior session and fresh new all-time highs we have to think that the bull camp has discounted anything overtly negative from the Fed later today. Prior to the Fed window we can’t argue against more gains but that sharp compacted range up yesterday might leave little in the way of close-in support on the charts. Initial support today is seen at 2264.50 while up-trend channel support off the November and December spike lows is seen down at 2236.50. Traders should expect an expansive range today as a 1 and done allows for more new highs while minimally hawkish forward Fed dialogue could produce the largest corrective setback since early November. We think risk and reward analysis favors the bear camp.

Other US Indexes: The March E-Mini Dow remains within striking distance of its recent all-time high and we get the impression that the longs are vulnerable even though the trade largely expects the Fed to raise rates. In fact, with the long series of new highs on the charts this month we doubt that the Dow will be able to discount even the slightly hawkish wording from the Fed statement. Critical support is seen at 19,809 and traders should expect a 300 point range today. The Mini-Nasdaq played significant catch-up to the rest of the market yesterday and without that outsized gain we would have projected the Nasdaq to encounter less volatility today. In fact with a massive range up move yesterday that could leave little in the way of support in the March Mini-Nasdaq until the old high of 4916.75.

TODAY’S MARKET IDEAS: The bulls might ultimately prevail but we think the risk of being long through the Fed statement perusal later today is too high. Bank long profits on an early rally and or tighten profit stops before the Fed release.

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