MARKET COMMENTARY

The market was very bullish due apparently to the “favorable” action of the Fed’s decision not to raise the interest rate. Frankly, it is hard to fathom how the market can react so strongly the “news” or rather the absence of news. Nevertheless, we can’t fight the market. Judging by the bullishness of the Dow and the S&P, it is possible that Wednesday’s market may continue to gain. While I am saying this, I am troubled by the lower volume on the Russell. So, I don’t exactly see the kind of market enthusiasm that I should be able to see in other bullish situation. This is rather odd, indeed.

Anyway, all indexes’ charts have to break the resistance I identified below to warrant any change in trading actions and plan. When they break, they must break them with significantly higher volume than yesterday’s non-emotional volume. Otherwise, we have to be careful with false breakout. Again, my RSI 60% must be exceeded nicely.

While it is now hard to say if the markets are going to bullish or return to bearish trend, I am more inclined to suggest that the markets may drift sideways now. We will find out soon enough.

It may be useless market for directional traders if the markets indeed trade in a range. But options traders will have an advantage in this setup. Iron Condor, Butterfly, Calendar Spread, and Double Diagonal are some the common strategies to be used for this kind of markets.

DJIA Daily Chart

The Russell stopped short shooting above the horizontal resistance line. Wednesday’s market is crucial to mark the change of market trend if it closes higher.

RUT Daily Chart

The Nasdaq also looks set to break the resistance, instead of support as I suggested yesterday. Again, we need the confirmation of the breakout.

NDX Daily Chart

STOCKS TO WATCH:

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