Click on Chart to Enlarge
The market reaction since the FOMC announcement yesterday has been an initial modest sell off. Often times initial reactions to news items are reversed, and given the technical set-up, we may be set for that here. The move up last week was more powerful than the move down over the last 4 days. The hourly technical charts are now more oversold than overbought, and price is holding above the 7-26-12 gap up which is chart support underneath current prices.
The chart above is a 30 min chart of SPY. The MACD is oversold, but the first cross up has not been a great signal over the last month. However, if a bullish divergence develops over the next couple days, that would be a nice short term long trade set-up. At this point it looks like the advance since June is running out of steam, but even if the market pulls back a bit more, the pattern and price logic are suggestive that the market will make another tradeable move up on the hourly charts.
There is no indication that the recent range type trade is over yet, so using oscillators for trading signals should be productive in the near term.
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