The morning reversal is interesting in that so many of the market sites out there have turned very bearish, but we have yet to see that reflected in follow-through lasting more than about a day. Nevertheless, Toni Hansen is still more cautious for the longer term.
Toni Hansen is continuing to focus more on the downside as the week progresses. The change of pace on Monday afternoon was a great lead for further selling.
Even though the pace on the larger intraday time frames was able to turn back over again as we start the new week, Toni Hansen remains more cautious on new position trades for longer-term buy setups, since October is still a major reversal zone for the markets.
The slightly higher highs made in the indices and the change in upside pace in the market over this past week has opened the door for further corrective action on the weekly and monthly time frames.
The breakdown on Thursday afternoon left the market somewhat extended on the downside heading into Friday. This will make congestion with a slight upside bias into the morning easier.
The current market action suggests that the trading range from January through April in the S&P index will likely be a stronger resistance level for the overall market.
All eyes will be on the Fed today. A typical Fed day begins with some upside in the morning before things slow down ahead of the announcement. Risk increases dramatically into the early afternoon as volume drops off with intraday traders taking to the sidelines.
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