Last hour selling puts the brakes on the current uptrend as volume ends mixed. The Federal Open Market Committee began its meetings today as they mull over rate decisions as well as its current quantitative easing strategy. Volume ended mixed, but was below average. Monday’s have been light on volume and today was no exception. The reversal on the NASDAQ did give the index a distribution day, but it also was another sign of stalling. This is the second time in a week we saw the NASDAQ gap higher and reverse in heavier trade. Despite the reversal on the NASDAQ the current uptrend remains intact.
We have seen this type of action before heading into a Federal Reserve rate decision week where the indexes pull back in front of the announcement. We do have to keep in mind the NASDAQ was up 8 straight days and we were bound to see a negative close. It would have been preferable to see the market close in the red quietly rather than a distribution day. However, today wasn’t too alarming with volume being below average. However, if we do see further price destruction with bigger volume it would be a signal this market has much further to fall. For now, we still can push higher.
There is lots of talk, noise regarding what the Federal Reserve should and will do. Some think it will be about the Federal Reserve raising rates with better expectations for the economy next year. Others believe the Federal Reserve will not talk about raising rates, but increasing their bond purchases. This talk is all noise and will do very little for us in terms of making money. The reaction by the market will be of the utmost importance to us and ignoring the hype is what we’ll do.
Tomorrow we are going to get numbers regarding Consumer inflation as well as Empire Manufacturing figures giving CNBC plenty to talk about in the morning. However, the talk will be owned by the Federal Reserve and you will have to ignore it as noise. Pay attention to the market action and proceed accordingly.
Cut your losses!
