Another new week, Another Fed Announcement

Although we had another uptrending day in the cash S&P500 market on Friday it was a much smaller range day. It was also a Reversal Day. A Reversal Day top is made when a new daily high is made but the close is below both the current open and previous close. Friday also had both lower volume and price movement as participants lost interest; most likely due to the impending weekend and upcoming Fed meeting. That all said, the upward moving price pulse from last Tuesday’s price fractal low of 1460.66 continues.

From a technical perspective the market continues to show strength despite Friday’s reversal day on weaker volume. The composite index has caught up to the RSI and so that potential negative is gone. We just may need to digest recent gains by “testing” the head & shoulders neck line we just broke through. That level is at 1486 today, which is smack dab in the middle of the short and intermediate moving averages. Remember also that 1490 is strong chart support.

Of the two price scenarios discussed Friday we can’t rule out either. They were:

A) If the price pulse low of 1460.66 marked a significant low then we should rally through this week into next without a pullback this week.

C) If 1488.94 was not significant then we are making a short term high now and we will pull back over the next few trading days.

I continue to favor scenario “C”. It also allows the market to hesitate and gyrate a bit into the Fed announcement this week. But there is not sufficient evidence to act upon. I will keep the stop on the SPY Long position at 146.30.