So much for a quiet week going into the Fed meeting as traders faded the gap open. Our take on today’s trading action:
The market gapped higher today but found itself on the ropes through the rest of the session. The performance for most of the stocks in the Nasdaq Composite was atrocious. While the closing quote shows the Nasdaq down only -0.12%, the percentage change between today’s open and the close was approx. -1%. If you used a simple MACD indicator, you stayed on the right side of this move throughout the trading day.
Similarly, the S&P 500 index declined throughout the session even though the percentage change between today’s close and Friday shows the index up 0.57%.
It was a difficult session today for many reasons but for traders sticking with their guns on long trades, it was especially painful. The path of least resistance was down and we suspect that this may be the case tomorrow as well, at least initially.
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The markets were in for a rough day today following a gap open. We saw a bullish MACD divergence at the end of the session in the S&P 500 index, perhaps suggesting a firming during tomorrow’s session. The Fed FOMC meeting gets underway tomorrow and we will get the latest CPI readings on inflation.