Signals & Trading Plan for Monday 9/9/19

Market context
Stocks are currently in Surge7 of the Up Trend that started on 12/26/18.  The upcoming important event on the horizon is FOMC meeting and announcement on September 17-18.  Here is a useful assessment of the Fed actions from Wall Street Journal:

"The Fed has through the course of the year seen fit to lower the expected path of interest rates. That has supported the economy,” Mr. Powell said during a moderated discussion in Zurich on Friday. “That’s one of the reasons why the outlook is still a favorable one despite these crosswinds we’ve been facing.”
Mr. Powell’s comments implicitly acknowledged that investors’ expectations of easier Fed policy this year have buoyed financial markets and business sentiment and that failing to deliver at least partly on those expectations could damage that outlook.

In short, the Fed has publicly acknowledged that they know the market wants more easy money to buffet against the wind of the tariff war.  However, Mr. Powell also said “our labor market is in quite a strong position… We’re not forecasting or expecting a recession.”

So if we have to take a SWAG (Scientific Wild Ass Guess), we would say that a 0.25% rate cut is very likely in September.  A 0.5% rate cut is more doubtful.  

Whether or not this will wreck the rise of Surge7, it is hard to say at this point.   However, we suspect that market internals will send out a message to say “bullish” or “bearish” as September 18 approaches.

In the meantime, the question is how to trade between now and then.

The rest of this article covers:
Table of support and resistance levels
Updates from market internals
Planning your trades

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