Preview SPX Ahead of the FED

Table of Contents

• Market Summary

• SPX Technical Analysis

• US Dollar ($DXY)

• Bitcoin Update

• SPX Deep Dive

Market Summary

The market is in the peak zone and provided nice gains. Nano-micro wiggles to the upside are likely not 100% complete.

The FED Meeting is on Wednesday. Expect increased volatility and a whipsaw. The gains/losses after the FED are typically reversed the next day.

Remember the positive seasonality during the first couple of days of February, which can provide a short-term positive bias to major indexes, but there are exceptions.

But based on my expectations of market peaking, the game should be raising cash, or STR, or “take your money and run,” whichever you prefer.

Some interesting statistics are the opposite of my view of the market. Green January in an election year is rare, but when it happens, the yearly return is 15.6%:

• Stocks are close to flashing an ultra-rare indicator that's led to a strong year of returns 100% of the time

But the statistics below (from X) are much more significant and show the top 10% of the largest stocks as % of the equity market capitalization (red circles correspond to about 75%). The first two circles correspond to two of the most significant bear markets in the past 100 years. “Living dangerously” in the stock market!

The next update is likely after the FED-day, as the FED-day usually produces noise or false signals.

SPX Technical Analysis

SPX daily and weekly technical that we review in the past issues wave red flags about pending correction.

1H SPX chart in Figure 2 indicates double negative divergences in technical indicators, also warning about a loss of momentum and incoming correction. Though negative divergences on the hourly charts are less reliable than on the daily and weekly ones.

It is worth repeating that SPX has satisfied all up (cycle) targets but could move still bit higher within the 20W cycle target range.

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