It would appear that the Founders Group took our profits at the “tippy-top” (as Alexandria Ocasio Cortez would say) of the post-Fed announcement rally. After the news conference, a retest of Monday’s low was already underway.
Retests usually come on the fifth trading day after the low, so this downdraft started a bit early. Perhaps this is more bearish. Only time will tell.
And there is no guarantee that the retest will be successful. We should be looking for positive divergences on the retest, even if it goes to a lower price. It is time to get out your notes for a bottoming process.
I did not detect anything unusual or unexpected from the Fed. Perhaps it was this statement by Chairman Powell:
“I think there’s quite a bit of room to raise interest rates without threatening the labor market.”
I will further dissect the announcement and news conference tonight. There is no valid pivot with the market failing to hold and close above yesterday’s high. The Navigator Algorithm is in its “Trend Reversal Imminent” mode but has yet to issue the buy signal. The candle for the day looks nearly as hostile as Monday’s candle looked positive.
If it comes in right on cue, the Nominal 20-Week Hurst Cycle bottom is forecast to occur mid-February. But it can bottom a week on either side of the projected date.
Stay tuned as it is about to get interesting. If we put in new lows, the new low will typically need a retest as well.
A.F. Thornton