Professor’s Comments September 18, 2019
Posted by OMS at September 18th, 2019
The Fed will be announcing its latest policy on interest rates at 2 pm today. It is widely expected that they will reduce the overnight rate by a quarter percent. If you think about this for a moment, you’ll see how crazy this is IF what they are saying is really true….that the economy is in great shape with the equity markets still near record highs. The mere suggestion that they are even talking about lowering interest rates now tells me the Fed sees trouble ahead for the economy, and has decided to use one of its precious bullets now instead of later.
Anyhow, equity markets remain at a very critical juncture going into his Fed Meeting. The past few days have seen the Dow decline to trend line support which could be wave ‘d’ down in the Bullish scenario. If this alternate scenario is taking place, the Dow should hold current support levels and begin a wave ‘e’ rally to the 27,600-27,700 level.
If the market doesn’t rally, and begins to break below trend line support, it’s likely that yesterday’s early decline and late rally was the completion of a small wave ‘b’ up for minor wave 2 up, with wave 3 of Wave 3 down next.
The key numbers I’m watching today are 26,800 on the Dow and 7,800 on the NASDAQ. If the indexes begin to move below these levels, the markets are likely headed lower. If current levels hold, the alternate scenario is taking place and the market should begin to rally, with the Dow headed for a new high.
Right now, with positive indicators on the cockpit, I’m just watching and waiting to see how the market reacts to the Fed announcement.
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