Busy week!

Let’s take a look at what has transpired so far:

🔹Monday, stocks (SPY & QQQ) broke out of the weeks-long box consolidation

🔹Tuesday and Wednesday mornings, we got CPI and PPI with no surprises

🔹Wednesday afternoon, the FOMC announced no rate hike, as expected

All of this went according to plan.

Stocks were joyful participants moving nicely higher in the “good news is actually good news” sequence of events.

Then, Jerome Powell initiated liftoff. 🚀

He was much more dovish than anticipated in his press conference.

Furthermore, he indicated the Federal Reserve could potentially cut interest rates three times in 2024.

Stocks liked the news & QQQ nearly put in a new ATH.

The gap-up open provided follow-through.

Now we’re right back to that ‘stocks are extended’ situation.

$SPY gapped higher at the open today, moved lower to fill that gap, and then closed about where it started. The action is strong. And trends tend to persist.

So it could easily keep grinding higher into new highs by year-end.

The environment (sentiment, momentum, year-end window dressing) and the seasonal patterns support that outcome.

However, the extension is notable. Trading $10 above the 8-day MA with RSI nearing 80 tells us that correction could reappear soon.

If so, will it do so by time or by price?

If by time, watch for price to move along in a sideways range while the 8 and 21-day MAs catch up.

If by price, there is room for a retest of the low $460s - a pivot high and soon the 21-day MA - while remaining bullish.

$SPY

$QQQ teased us by trading toward new highs early in the day but then, failing to close there.

It’s not quite as extended as SPY. Can it get the new closing high to finish out the week?

If so, it will have to do so despite the rebal. and ex-dividend.

$IWM Up, up, and away. This is a massive gap-and-go for the small-caps as they touch a new 2023 high on more than twice the average daily volume.

The catch-up trade is working.

$DIA The Dow Jones Industrial Average is the first major index to log a new all-time closing high. It now has the luxury of no potential resistance overhead.

$TLT Bonds and stocks continue to work in unison. The retest of the 8-day MA was a success, and now TLT is back above the 200-day MA.

$DXY The Dollar plummets through the pivot lows, finding no support. For a couple of weeks, we’ve been looking for Dollar futures to get below $103.40 to open the door higher for stocks.

https://x.com/Andy__Moss/status/1730200768521638355

Now it's sharply lower.

🔹Does it continue back toward lows?

🔹Or stabilize between $100.50 and $102?

Still good to watch, but either outcome should be conducive to higher stock prices. As long as there is no sharp reversal higher, $DXY may be less of a factor for a while.

Incredibly bullish action. 🐂

After weeks of time correction, stocks broke out strongly, with many making new all-time highs.

Once again, we are looking at short-term extension as prices have moved well beyond their moving averages, and many RSI readings are above 70.

That doesn’t mean prices have to go down.

One of the most bullish things a stock can do is get overbought (RSI > 70) and stay that way.

It does mean we need to expand the charts and time horizons and start looking beyond the constraints of the last year or so.

In the near term, though, be patient and mind the extension.

🔹Follow the plan and process.

🔹Continue to look for low-risk entries that fit the appropriate reward:risk profile.

The Weekly Chart review will be crucial. Don’t miss it.

Thanks for reading!

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