Post-FOMC Charts

Here's the Russell 3000, which confirmed its bearish momentum divergence and a failed breakout by closing below 173.50.

We said that if prices got back below the 2018 highs, the risk would quickly shift to the downside...and unfortunately, this exact scenario is playing out in many US indices, sectors/subsectors, and leading stocks.

Click on chart to enlarge view.

Here's the US 10-Year Yield exhibiting little follow-through after its bullish momentum divergence and failed breakdown confirmed above 2.04.

Instead, it rolled back over with Rates around the globe. Once prices got back below 2.04 on a closing basis, there was absolutely no reason to be short Bonds and a pretty compelling reason to be long them.

We'll skip looking at the breadth stats since last week's action left them marginally worse than when we discussed them earlier in the week.

Rather than see other areas of the world "catch up" to the US, we are now "catching down" to the rest of the world, much like we did in September of last year. With that in mind, we'll keep an eye on International Equities to identify a potential tradeable low in the coming days/weeks/months.

In terms of the US Dollar Index, it made 26-month highs after breaking through resistance at 98 but faded late in the week. For now, the bias is to the upside, but buyers want to see a shallow/no retracement and prices to follow-through higher with momentum getting overbought. That would confirm a breakout from this messy trading range we've been stuck in.

The evidence of a rotation out of Bonds and Defensive Equities back into cyclical areas of the market has been building for several weeks/months, but the market has broken our risk management levels so we need to respect them and get the hell out of the way.

As long as Equities are below their 2018 highs, the risk is to the downside.

As long as the US 10-Year Yield is below 2.04, the risk is to the downside.

These moves are the result of billions of dollars being reallocated every day. They do not care what JC or Bruni think.

Let's remain patient as we wait to see how this correction plays out while also using this time to identify areas of the market that are showing relative strength and will likely lead when stocks regain their footing.

Check out JC's post "Still Cleaning Overhead Supply" as well.

Thanks for reading and please let us know if you have any questions!

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Allstarcharts Team