Guru View - The Big Picture

For FED Watchers:

Tomorrow FOMC will make decision on interest rate. The market is already priced in a quarter point cut. According to a survey, as of today there is a 98% chance for a 25-basis-point cut versus a 2% chance for no-change. Virtually nobody is expecting a 50-basis-point cut. If the Fed indeed cut .50%, the market will rally, otherwise, the market will experience some volatility this week.

Dow Jones (ETF DIA), Nasdaq (ETF QQQQ), S&P 500 (ETF SPY) and Russell 2000:

After Friday's sell-off two weeks ago, the markets have rebounded. If you look at the DIA (Diamond) chart, you will see a total of six consecutive up closes. We are probably due for some sort of pullback/consolidation.

COT Charts for NASDAQ and Dow are largely unchanged (see COT Report earlier), while for the S&P 500 and Russell 2000 there is evidence of recent commercial selling (last several weeks).

While the S&P 500 and Dow Jones corrected two weeks ago, their intermediate-term trends remain up. The story is different for the Russell 2000 however: this index did not better its July highs in October like all of the other major indexes.

There are two key warning signs worth paying attention to:

-Nasdaq 100 bearich COT chart (see Guru View 3 weeks ago, commercial sell-off NASD)
-Divergence in Russell 2000's intermediate trend

Good night,

Market Swimmer