Wang’s Happy Trading

from MyHappyTrading.com (by HappyTrading)

Last weekend, I said,
“The market is fighting to make this recovery stick. Nasdaq tested its daily upper BB last week and its 10-day MA has gone above the 30-day MA. The 20-day MA has turned up. SPX, on the other hand, is seeing the 10-day MA above the 20-day MA, but, was held under the 30-day MA. What the market needs now is a solid jump, a big GREEN day, to catch the daily upper BB to allow the market to continue higher. For the new week, we have the Fed meeting on Tuesday. I think the Fed will likely leave the rates unchanged. The financial markets are a bit too nervous right now for the Fed to make any changes. If the Fed leaves the rates unchanged, I think the market will likely rally. VIX closed above 22 last week and right at its 10-day MA. This makes Monday uncertain. I’d feel more comfortable if VIX goes under 22. So, I’ll be watching VIX carefully on Monday. The market is taking cues from the financial sector right now. So, XLF will also be a good indicator.”

On Monday, the market was indeed under pressure, as VIX went above 23.  But, on Tuesday, the Fed did leave the rates unchanged, and the market rallied.  On Wednesday, the market had a flat day with modest gains like I had expected.  But, on Wednesday night, I said, “Tomorrow is Thursday and some people may start to think about locking in profits. So, be a little more careful…”  Indeed, on Thursday, the market took a breather and slipped lower, although I commented on Thursday night on VIX that, “If it falls back below 21, the market should be able to recover some of the losses today.”  On Friday, VIX went below 21 and the market regained all that it lost on Thursday, and more!

The market ended on Friday on a strong note and gives the market upwards momentum to start out the new week. Let’s see where the market stands:

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