Trend Depends on Fed

Trends were tested hard last week, but at least initially they are holding here. We are at an important line in the sand for the semiconductor sector, which had been an important leader in the rally started last summer.

The S&P, like the NASDAQ, held firmly this week and both indices left good high volume reversal signals at their respective trends so we expect to see bulls in charge as we begin the week.

Important to note: The market is screaming bounce here. It’s oversold on a trend line pullback in a larger uptrend. The potential curve ball could come from Greenspan and the Fed. If they raise interest rates this week, and despite what talking heads assume there is a good possibility, it could be seen as a bearish development. We may be forced to cash in our bullish chips should the market react poorly to the Fed meeting Tuesday. Given the various pressures on the market at this juncture flexibility is an absolute must.