Despite the week's impressive gains, the Nasdaq 100 still lies almost 200 points below the multi-year highs, which were achieved in early January close to 1760.
Clive Corcoran writes that we need to monitor the Russell closely over the next few weeks to see whether the overall market can continue to rely on a strong showing from the small caps that helped to power previous rallies.
The chart for the Nasdaq 100 shows the first close above the 50-day EMA for several weeks. Admittedly, the EMA line has been in steady decline, but the 2.7% rally was accompanied by many tech stocks finally showing signs of life.
The consumer staples sector fund, XLP, performed a sharp reversal Thursday and finished at a new multi-year high. The fund, however, still has further gains to make before it attains the levels seen in early 2001.
The exchange traded fund for the consumer discretionary sector, XLY, produced one of the weakest charts Wednesday and the violation of the recent trend line through the lows highlights the concerns of a real slowdown ahead.
It would be dangerous to infer too much from the immediate reaction to the FOMC decision. On the S&P 500 chart, Clive Corcoran will be watching two key levels -- 1292 which marked last Friday's intraday high and 1260 which would represent a drop below the 200-day EMA.
If Treasury bond yields were to move decisively lower from here, this would suggest that bond traders at least may be starting to discount a recession on the horizon.
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