FOMC day. Normally a day I try to stay light. Housing starts up 10%. SP and DJ futures 3-waved up. I expect a trading range of 1135-1139 SP futures until the FOMC announcement 2:15.
Up until yesterday afternoon I have been trading in order to minimize overnight positions, awaiting the break of the 30-minute, 92-unit moving average in SP and DJ futures. That break never came. Yesterday discounted a FOMC outcome that will not materialize. They will do nothing and their language will not change. I came into today with a larger position than I have held since I entered on the I1 top 9/10. 9/13 held a slightly lower value but could be considered a double-top. The stock market held in a trading range for the next 5 sessions. Monday's trading was a breakout and I went short DJ and NQ futures at DJI cash 10,690 and an addition 5% SDS at the same level to bring me up to 15% SDS currently. I'm down 7 points on the NQ futures and down 65 points on DJ. My stops are over yesterday's high.
I am convinced that yesterday's high marked the top of the rally from the August 25 low. I1 is declining on a formal sell signal to a bottom below 2 at the end of this month. It will continue to decline into mid-November. The Daily Technical Composite is at -10, or it's initial sell level. The market would have to run away to achieve the next sell level of -22. The stock market has never run away to the upside during an I1 formal sell signal when the downward move was smooth (that is, uninterrupted). When an I1 downmove contains brief upticks the market moves up during those brief periods, sometimes explosively. I'll post the I1 chart as part of this talking point. The move down into the end of this month is smooth.
Here is the Daily Technical Composite: