Good day!
We don’t want to read too much into yesterday’s afternoon weakness but it did produce a 3rd ugly candle and we’re right on our first key support line, the support line of the rising wedge. We can add to that mix a little futures weakness for a change.
The bond market is big talk again and the FED isn’t sounding as they have sounded for the past decade. In other words, Powell’s comments seem to indicate that they believe rates are too low! That’s news, assuming that’s what he meant which is never easy with FED-types since a prerequisite for the job is having completed 3 semesters of “Advanced Doublespeakâ€. It’s October, it’s getting a little more scary, which is only natural as the frost is on the pumpkin and October is storied for the scary stock market rides it has delivered in the past.
We’re still preaching prudence and an open mind at this time but we remained concerned about this juncture. Additionally, the VIX finally registered a pulse yesterday, albeit, a weak one.
We believe that cracking key support of wedge is something that could trigger more technical selling. Will this just be short quick drop to shake out weak hands before launching the midterm election year rally? Stay tuned!
This game requires one to remain nimble and keeping an open mind helps us to remain nimble.
We will update further when warranted but be careful out there!
Cordially,
Wayne
