- I recognize that the market initially tried to rally but has fallen apart in the early hours of New York trading as the Consumer Price Index numbers came out at 0.3% month over month, hotter than the anticipated 0.2%.
- Because of this, traders of course panicked as they tend to do, as algorithms jumped into the fray and started pushing everything lower.
- That being said though, the question will be whether or not it actually changes anything as far as the Federal Reserve is concerned?
I have noticed a pattern as of late, the morning tends to be very brutal, but the afternoon tends to see at least in its attempt to rally. I don’t know if this is European traders freaking out, large block orders coming in the morning, or if it’s just somebody manipulating the market, but that has been what we have seen over the last several months. I cannot tell you how many days I thought that the market was in serious trouble, only to come back to the charts in the afternoon in America and see that we have turned around completely. Whether or not that happens remains to be seen, but it is worth noting that we have bounced a bit from the lows.
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Technical Analysis
The technical analysis in this market is somewhat ambivalent, as we are stuck between the 50 Day EMA above, and the 200 Day EMA below. All things being equal, this is a market that I think continues to be noisy, but I also recognize that Wall Street will be celebrating the idea that the Federal Reserve might come and bail it out. If that does in fact end up being the case, there will be a lot of celebrations as Wall Street loves that cheap money.
It’s also worth noting that the most recent swing high was lower than the one before it, but that doesn’t necessarily mean that we are kicking off a new downtrend. Sometimes, that can just mean consolidation and it would not surprise me at all to see this market consolidate over the next couple of weeks as we wait not only for the Federal Reserve interest rate decision, bumped the press conference afterwards which will almost certainly set the tone going forward.
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