Thursday December 19th – Fed Said What?

DATA – We had a slam down reaction to the Fed Mtg yesterday, and today we do have some data that is capable of moving the markets too. The question is, ‘Do we get follow through to the downside, or a bounce / rebound?’ The futures at 8:30 a.m. should give us a clue.   What did the Fed say..?

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What did the Fed say that upset the balance so much? Apparently, in 2024 The Feds were discussing a quarter cut now and 4 more next year. On Wednesday they changed that to maybe only 1 or 2 cuts in 2025. Possibly ONE rate cut in 2025?  The markets did NOT like that.

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I want to start with THE NASDAQ simply to highlight the cycle count.

1. Coming out of the ICL, Day 23 should be a half cycle low, because these daily cycles can be 40 days long and day 23 was too short, so we had a half cycle low at day 23 and a dcl at day 41.

2. The next daily cycle also dipped at day 21 (half cycle) and then dipped into day 32, which is good enough.

3. That leaves us on day 22 of the 3rd daily cycle and that is timing for a half cycle low, but this could be more than that.  This was not a normal dip, it was a crash.

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NASDAQ – Take a look at past half cycle dips. Yes, they also came in around day 22, but let me show you how different this was…

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The dips in September, October and November took several days for The Vix to get up to 23 area, but Wednesdays volatility was quite different, wasn’t it. We might be in for some all-out selling (a correction into an ICL over time).

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THE SPX dropped almost 200 points and lost the 50sma, closing below it. You can see that this also happened at the half cycle low in early September, but again, this is a little different, because…

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THE SPX is actually now very close to undercutting that last dcl. If the jobs report gives us follow through selling, this would become a failed 3rd daily cycle.

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QQQ: I was watching the sell off after the Fed Decision and it was really pretty relentless. Red candle after red candle after red candle just kept showing up.

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QQQ: And then suddenly we got a reversal candle near the end of the day. It could be a ‘capitulation low’ with that volume, and that MIGHT – MAYBE  give us a half-cycle low, but We’ll need to wait and see. This could bounce and start to sell off again too, so if anyone bought in, they’d need tight stops.

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Wasn’t this the exact spot where I said that I would short The SOXX? Yes it was, but I didn’t pull the trigger, because the MACD looked strong and it looked as though the SOXX could bounce higher. If we bounce that bounce can be shorted too. If we are only on day 23 Thursday, there should be time to buy SOXS if the General Markets do bounce.

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General Markets: It is slightly possible that we have a ‘half cycle drop’ here with the Fed and things reverse higher again today, since this is a bull market, but it is also possible that the Fed announcing maybe on 1 or 2 more cuts in 2025 has started to send this 3rd daily cycle low and gradually an ICL will form. We’ll see how the markets handle the Data today.

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WTIC – Did you think Oil changed?  Nope, choppy and sloppy as usual  🙂

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THE USD surged with the Fed rate cut. It is now at a new recent high above $108. My thinking from weeks ago was that the USD would give us 2 daily cycles to the $107.50 area and then start to weaken in the 3rd daily cycle. We are now in the 3rd daily cycle, but now with only 1 or 2 rate cuts next year, that seems to make the USD happy. That said, The USD has not had a big effect on Gold, they ran higher together in 2024.

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GOLD dropped, but to be honest, it was due to drop, so I can consider this as expected.  I have explained the difficulties with this set up.  it looks like an ICL is in place, we have a day 19 peak, so this looks like a first daily cycle and I have always used Gold as the cycle guide, not the Miners (they overextend). So, we will see if that low holds an we are actually in the timing for a dcl at any time.

 

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SILVER broke down, and this could be a shake out at the 200sma, but it is not a buy yet. This can drop further.  This should be a 4th daily cycle.

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GDX -The Miners usually exaggerate the move and when you look at what Gold did, you can see that GDX did much worse than Gold itself with a 4.49% drop! Let’s zoom in…

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GDX is on day 23, so it can bottom at any time too.

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RUINED SET UPS?: I was watching several set ups on my watchlists from past reports and also for future reports if things remained bullish.  I already had some of these in the reports and personally bought and owned some, but I did sell them right before the Fed just in case things became volatile this late in a daily cycle. I figured that I would just re-buy them again if things went well.  So lets look at the set ups realizing that they may still be ok if that dip was a half cycle low, but also they may now be ruined if the markets are now entering a ‘correction’ phase.

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BBAI was in the reports after it reversed at the 20ema (and SOUN ran so well). I owned it and it ran strong, but I did sell it after capturing this at 1 p.m. yesterday, just to be safe. I figured I could re-enter again later…

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BBAI reversed and dropped, now closing down 8%. I won’t rebuy this until I see if the markets settle down and reverse higher. You can see that it could possibly drop to the uptrend line  & reverse. We’ll see.

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AAOI I had this in my reports back in late November. I had a list of strong stocks that I wanted to buy the dip and they were mentioned on this chart.  AAOI, IONQ, and EXFY have all done very well…

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AAOI dropped and started to reverse, so I posted this ‘Keep an eye on this’, because when it rallied, it had a 55% up day after earnings and then some ‘up 20% days’. It was not yet acting steadily at the 20ema though.

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AAOI dropped again to the 34 sma (twice) so I did buy it here and posted this in the comments. It formed a bullish wedge.  I actually rode it up 20% until the Fed decision and…

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AAOI started breaking out and ran up 20% yesterday, but I only had a small position of 300 shares. I rode it up until the Fed decision then exited. I was going to look to re-enter after fed volatility, but this is how it closed. It is still above the 34 sma (not shown) but I won’t rebuy unless the markets just put in a half cycle low and recover. The VIX makes me think that the markets may just keep selling off though.

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CRM I have also been waiting for CRM to settle down. I drew this yesterday too ( I did not buy this one) and was going to put this in todays report if the Fed reaction was positive.

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CRM now we have another good set up that looks ruined. I’ll Keep this on a watchlist.

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CAMT – I captured this chart for the reports at 10:30 in the morning ( did not own it). It was in my watchlist of current bases and looked ready to breakout, but it did drop with the Fed, so it stays on the watchlist.

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So I’ll just repeat this thought:  Sometimes we get a knee jerk reaction with the Fed Day and then the markets reverse and do the opposite on Thursday or Friday.  We’ll see if that happens, but we could be entering a correction  and eventually drop down into an ICL too. So I mentioned above that it is slightly possible that we have a ‘half cycle drop’ here with the Fed and things could reverse higher again today, since this is a bull market. That said, it is also possible that with the Fed announcing that we may only see 1 or 2 more cuts in 2025, it has started to send this 3rd daily cycle lower and gradually an ICL will form. We’ll see how the markets handle the Data today.

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~ALEX

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BITCOIN dropped on the Fed Wednesday, but it has reversed overnight at the 20 ema. Today should be day 45.

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I captured several Crypto stocks that were reversing at the 20 ema before the Fed. This is how they should be acting, but after the Fed sell off in the markets, they all broke down.

This was Pre-Fed Iren.

This was Pre-Fed WULF. You can see how these dropped to the 20ema and then reversed higher.

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This was Post-Fed WULF, and you can see that these sold off with Bitcoin and the markets. Now we’ll see if these can recover with Bitcoin moving higher this morning or will they continue to deteriorate. This was a big 15% drop and this sector is known to be volatile.