News:
The Fed has confirmed it’s ready to start raising interest rates as soon as March.
Fed Chair Powell told us to the Fed will, “move steadily away from the … policy that we put in place to deal with the … pandemic.” In short, no more free money…
After the market heard this … it freaked out. Despite trading in the positive all day, markets sank and closed in the red.
The Fed’s move was expected and is a vote of confidence that the pandemic is drawing to a close and the economy can stand on its own.
Still higher interest rates make borrowing more expensive and could slow economic growth. We remain in shake-out mode.
One unrelated development came from a Wall Street Journal report that Meta Platforms, Inc. (FB) has ended its cryptocurrency venture Libra. It selling what’s left for an insignificant $200 million.
Technicals:
The markets remain oversold at the moment.
The rubber band is stretched out almost as far as it can go.
Monday’s lows look to be a short-term bottom. I’m still awaiting confirmation that the markets want to turn. Currently, I’m unconvinced.
Yesterday the SPY and DOW managed higher highs and higher lows. But the Nasdaq and Russell 2000 posted both higher highers and lower lows. The divergence means the markets don’t agree.
Failure to agree to give me no clear path forward.
I’m sitting out for now.
Timing:
The Fed has spoken.
Only three trading days remain in January…
Earnings season rolls on. I’m watching for any new emerging trends.
Watchlist:
*GMVD has support at $4
*SRRA has support at $26
GRPN has resistance at $27.50
LLNW has support at $4
HOPE is on watch
MDRX has support at $19