Guru View

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The stock market has reversed after first testing new
highs (for the week) on Wednesday following the FED
decision - only to dramatically sell-off on Thursday
violating short-term support.
This breakdown in price is starting to confirm the
bearish COT charts of the Nasdaq 100 and Russell
2000.

It looks like we are headed for a test of last week's
reaction-lows. Here are the support levels:
Dow Jones- 13,400 | 134 for the DIA etf
Russell 2000- 790 | 78.5 for the IWM etf
S&P 500- 1,490 | 149 for the SPY etf
NASD 100- 2125 | 52 for QQQQ etf

Even though it declined for the day, the Nasdaq-100 price
chart continues to look the most constructive out of all the
indexes. The intermediate trend remains UP unless we
start to break below critical support at around 2125.

If the above support levels are taken out, the US stock
market is going to start to paint a bearish trend. Consider
the breakdowns in financial companies such as Citibank.
Also keep in mind that the Russell 2000 closed below 800
today. Last time that happened, the RUT reversed in the
very next session - to the upside. We'll see if the bulls
show up this time around...

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