BROAD STOCK MARKET TRADE ALERT (4:30 PM EDT)
Today is the first day after the long 4th of July holiday week-end in the U.S., and investors/traders were snapped back to reality as the minutes to June's FOMC meeting were released indicating that a July interest rate hike is likely coming and that some Fed officials had even wanted to raise rates in June. This hawkish news pushed the broad stock market down today, and our three indices (DOW, S&P 500, NASDAQ) closed in the lower part of their ranges for the day. We also have bearish divergence as the DOW and NASDAQ still haven't exceeded their June 16 highs while the S&P 500 has, and the S&P 500 made a new weekly high on Monday, but the DOW and NASDAQ have not made new weekly highs. Today is the last day of our strong reversal zone, so unless this market "breaks out" upside, we expect it to fall from here - most likely to the final medium-term cycle bottom due several weeks from now. For these reasons I am going to enter a short position in the broad stock market for tomorrow's market open. We can place a stop loss on this trade based on both the DOW and NASDAQ closing above their June 16 highs (that would be 34,589 for the DOW and 13,864 for the NASDAQ).
Today is the first day after the long 4th of July holiday week-end in the U.S., and investors/traders were snapped back to reality as the minutes to June's FOMC meeting were released indicating that a July interest rate hike is likely coming and that some Fed officials had even wanted to raise rates in June. This hawkish news pushed the broad stock market down today, and our three indices (DOW, S&P 500, NASDAQ) closed in the lower part of their ranges for the day. We also have bearish divergence as the DOW and NASDAQ still haven't exceeded their June 16 highs while the S&P 500 has, and the S&P 500 made a new weekly high on Monday, but the DOW and NASDAQ have not made new weekly highs. Today is the last day of our strong reversal zone, so unless this market "breaks out" upside, we expect it to fall from here - most likely to the final medium-term cycle bottom due several weeks from now. For these reasons I am going to enter a short position in the broad stock market for tomorrow's market open. We can place a stop loss on this trade based on both the DOW and NASDAQ closing above their June 16 highs (that would be 34,589 for the DOW and 13,864 for the NASDAQ).
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