Markets have been on a v-shaped recovery ever since the sell-off started a few weeks ago. Since bottoming on February 9th there’s been an aggressive recovery. But there’s also been an interesting shift in sentiment. Has good news become bad news again? (Meaning the markets think good economic data could force the Fed into raising interest rates?)
Wednesday will be the release of FOMC notes at 2pm Eastern. That will be where we get a better sense of what’s going on. Provided the message remains consistent — that the Fed isn’t going to pull the rug out from under anyone, and they’ll continue providing transparent forward guidance — everything should move forward business-as-usual.
For the week, 2800/2825 are the upside resistance areas, but a technical retest of 1700 appears likely, with a more extreme re-test of 2650 or so (the 200-day moving average). A pull-back to these levels would not be viewed as a trend failure or recovery failure unless there is a shift in macro-economic data.
The BigFoot database has stabilized and macro’s remain long. Expect some mid-day volatility on Wednesday as the market sorts out a direction. This shortened week may end up being a decision point for whether or not this market can regroup and move higher. Based on how the technical patterns have emerged so far, it appears the short-term damage is mostly done, and the longer-term bull market is resuming.
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