In typical fashion volatility was sparked after the rate announcement from the Federal Reserve. Janet Yellen’s first meeting is now out of the way and we can move forward. On the positive side of the market today is we were able to close above Monday’s high on the NASDAQ. Now, given the amount of selling today doesn’t bode well for this rally to continue higher. At this point today’s move is going to cast a shadow of doubt whether or not we can push into new highs. The bears will certainly have a field day with the perception the Federal Reserve is simply “winging” monetary policy. Our focus will remain the price action we have in front of us and right now we are now in shaky territory for this new leg higher.
One thing to keep an eye on is the amount of volatility in the market at the moment. While we are focused on price volatility is important too. Using SPY and QQQ their respective 30 day average true ranges are near their upper ranges. All average true range (ATR) means is there is a good chance we are in for a bumpy ride ahead. Whether the direction we are experiencing quite the volatility in the market and it will test the patience of many. In these times of volatility it is prudent you stick with the plan and not get frustrated no matter HOW frustrated you may get. Price will always lead us. Stick with the plan and you’ll come out just fine.
I am sure many are still going to try and say we have topped. They may very well be correct, but haven’t we heard about “the top” quite a bit? Eventually, the pundits calling for a market top will be correct. If we are to see a top price will quickly deteriorate and we’ll be getting proper sell signals. Trust the process and the system.
