Since last week, I’ve repeatedly harped on the increased chance of whipsaws (i.e.- false/failed breakouts) this week due to the upcoming much-anticipated FOMC rate decision. As of today, we had our first whipsaw(s). Whether or not that will be the last is certainly T.B.D. as I wouldn’t be surprised in the last if today’s whipsaw proves to be a whipsaw with another move back above the key downtrend lines off the highs on all 4 of the key major indices ETFs & futures contracts for the S&P 500 & Nasdaq 100 that I regularly track (SPY, QQQ, /ES, & /NQ). 60-minute charts for all, highlighting today’s whipsaws, below; nor would I be surprised if it we don’t get another whipsaw with a move back above the trend lines again. Bottom line, this is exactly what I expected & the reasoning behind why I personally widen stops on any swing positions & also keep things relatively light until the FOMC rate decision & subsequent Powell press conference is out of the way.
NQ 60m Sept 17th
ES 60m Sept 17th
QQQ 60m Sept 17th
SPY 60m Sept 17th
In addition to the $SPX & $NDX (among other things), I’m also continuing to keep a close eye on XLF (financial sector ETF) for a breakdown, especially a post-FOMC/Powell breakdown, below the 60-minute minor uptrend line & recently highlighted 45.20 support/resistance level. Note the price action following recent breakdowns below similar uptrend lines on the 60-minute chart below.
XLF 60m Sept 17th
Bottom line: I put little-to-no weighting on any breakouts above or below support & resistance levels that occur this week before tomorrow’s rate decision & subsequent press conference. Even then, the market’s reaction immediately following those two events, quite often, isn’t the lasting reaction that sticks so even that immediate reaction should be taken with at least a small (if not big) grain of salt.
In the previous video published earlier today, I outlined some of the likely post-FOMC scenarios for the market with the very near-term outlook somewhat obscure & likely dependent on whether the Fed cuts 25 or 50-bp tomorrow. I also highlighted where & when the intermediate to longer-term outlook for the stock market will begin to change, especially if we get more than a relatively minor post-FOMC rally.
As of now, especially with another rejection (or even better, a failed breakout) off the primary downtrend lines on /NQ, QQQ, /ES, & SPY today, even the short-term outlook hasn’t changed although I wouldn’t put a much higher weighting in today’s failed breakout than I put in the actual breakout above those downtrend lines earlier today; essentially just pre-FOMC noise although the indexes do remain below those key downtrend lines after yet another failed attempt to surmount them.