Morning Rally, FOMC today, Is this the start of a new bull trend or is this pop the last hurrah?

Did the price action this last 3 days catch you unaware? were you super bearish but the market rallied on you? Are you super bullish now?

Read on for my take on what is happening.

Big picture on SPY 0.00%↑

Over the last 3 months market has been selling off.

Last week we got the flush out into 410 after breaking the 200dma. Each major pop has been met with selling. With interest rates near 5% why own equity has become the theme..

That said this weeks’ rally imho is a relief rally from a major oversold condition.

A number of tech names sold off after good earnings, however they have rallied after filling the gap. NFLX after their e/r has held its gains. There are some indications that the start of a bear rally could be in the making.

today we crossed over the 9ma.

Until SPY 426 and really 431 is reclaimed I’m still in the overall bear camp looking for over bought conditions to get short for long term swings and continue to scalp either direction intraday (my bread and butter)

My plan today was to let market rally and get short 421.30 to 422. as I’m writing this the first target of 419.50 has been met.

Intraday I am looking for 1 to 2 level moves.

Bigger picture, I need to see the reaction to FOMC and what Powell says.

Overall I think we are overdue a relief rally and market is setup for a larger squeeze. I def do not expect new highs in 2023 and there are major risks in 2024. Interest and their expected moves is driving the market now.

3 scenarios I’m watching for after FOMC

More selling this year (setup within 2 weeks)

If we are going to sell off more I could see a squeeze after Powell speak pushing us to back test 423.30 200da and possibly as high as 431 which will be a back test of the multi-month trend line off lows. A fail there and I think we see 390-400 in next few months.

More consolidation

If see a mini rip into 422 and fail and yank into 418 and then bounce into 420, then might just burn premium on the day and. we may chop around between 414 and 422 for a few days.

More rally

for a bigger rally to really develop, I’d like to see 410 retested or at least a volume yank back into 412-414 and then a reclaim over 420 tomorrow. if we clear 422 today dip and then clear 422 again, I’m also game for joining for a short squeeze today itno 425-426

Overall this is going to be tricky and we typically don’t move more than 4-5 points so to determine if this pop is the last hurray or the start of a new rally is going to need us to see how market reacts to key levels after FOMC. ideally we get some trend into the close today into a major level and we get a gap reversal on that level tomorrow. That would give me stronger conviction for a move in either way.

For now lets’s say I have a 60/40 bias bullish bias into next week. but that can easily change on a dime later today.

Hope this was helpful. Please give me suggestions on how I can improve sharing my thoughts.