The “buy into The Fed and then dump it” pattern happened in September, too. The issue is whether history repeats itself and we have just witnessed another multi-month top. Thus far, we are seeing some softness but nothing to aggressive yet to the downside. Looking at the SPY below, a gap-fill to Tuesday morning’s pop would not be particularly bearish, if it occurs.
I am focused on minding the 1420 and then 1400 levels on the S&P 500 Index. In addition, I am looking to see if many individual stocks in the Nasdaq and Russell 2000 indices can continue to base well even during a market consolidation. I am also staying patient eyeing some potential short setups we have been discussing inside 12631.
Overall, I am expecting a cooling off period short-term. A red close or series of closes to conclude this week is not a reason for concern, in my view. The real issue is whether the market can improve underneath the surface and firm up in the face of it.