Brave bulls
The markets $DJIA(.DJI)$ , $NASDAQ(.IXIC)$ and $S&P 500(.SPX)$ were all rather indecisivewith only the Nasdaq pushing down more thanthe rest. It feels like the market wants to makeanother push up past the 4030 for a nice cup and handle. However, I still feel like this may be a bull trap considering the levels we are at and the technical pattern we have. So in my opinion, it seems more likely that the markets might push down more from here to approach the 3800 levels for a wave 2 retreat.
Depending on how sharp that pull back is, we may still get a year end rally or at least one that start at the turn of the new year. Again price action at the important levels will be key. A retreat here is in fact necessary and signs of ahealthy and functioning market.
Powell speaks again today. And as usual, many will be picking at his words to figure out how he will be steering the FOMC. I don't think he will deviate much from his stance having gone this far to defend his hawkish stance and stick to his guns. The labour market is holding up nicely which gives him confidence to continue his quantitative tightening measures even ifinflation seems to be waning on the data side.So as much as the market is clamouring for him and the FOMC to start pivoting, he might want to play it safe. And it will be better for himto be hawkish now while he still can. He mighteven surprise the market by being more hawkish than expected. The markets are up by quitea bit off the lows, he even has that cushion to bounce off of.
Hence, I am still cautiously optimistic and have no intention of adding to any positions at this stage. I am happy with my allocations havingraised substantial cash last week and will waitfor the wave 2 pattern to complete before deciding to add.
Stay safe! 😊
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