Market Overview

Friday's Market Minute: Edge Of The Wedge

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Friday's Market Minute: Edge Of The Wedge

Markets chugged into new all-time highs once again this week as the Fed delivered its widely anticipated rate cut.

S&P Futures are up about 0.8% since previous highs in July, and a bit over 6% above the January, 2018 highs. However, the longer-term, typically bearish Rising Wedge trendline pattern is still in play. The pattern’s upper boundary began at the 2018 highs and connects with the Sept. 2018 and July 2019 highs, suggesting resistance near 3,050, which is where prices have stalled. The contract’s weekly RSI, a measure of momentum, has surpassed the previous highs from last month, but remains in a downtrend that began about 14 months ago.

This information is not meant to suggest a crash is written in the stars; rather, that markets could be near an inflection point for a breakout to either side. Consider that implied volatility of the /ES is near yearly lows, while the VIX has once again been pushed down near the 13 handle. Contracting volatility is often a precursor to a bigger move, as bulls and bears become increasingly entrenched in their positions. And once the tipping point happens and participants on one side start getting squeezed out of their positions, things can change fast.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Image by Ahmad Ardity from Pixabay

Posted-In: S&P futuresNews Futures Global Federal Reserve Markets ETFs General Best of Benzinga

 

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