Don't fight the Fed seems to be the mantra that we all need to heed at this point. The blue chip sectors have some major repairs that need to happen before they can be trusted again, but the NASDAQ is in great shape here and should offer some excellent long side set ups once it builds a bit better base of support. This is necessary as the move off the lows this week puts the sector in a bit of a near term unstable condition that is vulnerable to sharp, stop-gleaning downswings.
We will need to watch the financials for a clue as to how far to expect this oversold rally will be able to go. If the financials lag here, it will set up the S&P 500 for another steep decline once it runs into overhead resistance.
And, most importantly, everyone should keep in mind that we have open gaps below left this week as the market rallied on rate cut rumors. The open gap in April didn't matter for some months. It remains to be seen if this time the same will be true. Tread carefully until we can be sure.
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