Mid-week market update: I don`t have very much to add beyond yesterday`s commentary (see Hawkish expectations). Ahead of the FOMC announcement as of the Tuesday night close, fear levels were elevated.
The market`s retreat left it oversold or mildly oversold, such as the NYSE McClellan Summation Index (NYSI).
Both the NYSE and NASDAQ McClellan Oscillators (NYMO and NAMO) were approaching oversold readings.
As I pointed out yesterday, anxiety was in the air as the market was discounting a Fed policy error of overtightening. Arguably, the recent pullback is in line with the historical seasonal pattern of mid-December weakness before a year-end rally.
Here comes the oversold bounce. Tactically, I remain cautiously bullish and I will be monitoring the evolution of the market`s internals and psychology as prices rise before pronouncing judgment on the durability of this rally.
Disclosure: Long SPXL