The week ahead 9/19 - 9/23

The market is on a teeter totter.  One week it looks good for the bulls and the next week it looks good for the bears.  The overall picture to me still looks moderately bearish aside from the strength that we are seeing in the Nasdaq.  Even though I think the rest of the market looks moderately bearish the strength in the Nasdaq is so impressive that they might pull everybody else higher. 

I want to talk a little bit about how I view the market in terms of the market leader.....I am always watching to see which market is the strongest in their direction or trend.  For example; during the sell off in August the Transports were the weakest market by far.  They were the weakest because they were first to make new lows of the year.  They were also the first ones to get wide separation from their major moving averages. The Transports were the strongest in their direction (lower) which told me that they were the leader to the downside. 

I think that we are now seeing the same thing happening with the Nasdaq only to the upside.  The Nasdaq looks like they are on a run to test the highs of  the year.  This would also mean that they would create separation from their major moving averages to the upside.  If this happens then I think that we will see all of the other major markets chase the Nasdaq  higher just like they chased the Transports lower.  

On to this week.......

We are just getting out of rollover and now heading into a two day FOMC meeting.  I hate to say it but technicals are not the most important thing in this market right now.  Although I believe that technicals are always the most important thing to focus on right now technical traders have to be small and nimble.  With a strong Nasdaq and weak everything else this market can do anything.  

For my big picture direction I will remain focused on the Nasdaq and how their trading according to their major moving averages.  Like I said; technicals are not the most important thing heading into this week the FOMC is.  But when the meeting is over then the technicals will become more relevant.  I want to see if the FOMC meeting collides with the bullish trend of the Nasdaq or goes with it.  Once the meeting is over I will be using the Nasdaq to help me identify the direction that this market is headed.  

With the Nasdaq being the leader to the upside I will be watching to see if their technical levels hold. Regardless if the news is bearish they should pull us up.  If they fail to hold then down we go.  If the Nasdaq can take a hit from bearish news and hold above their major moving averages then that will tell me how strong the Nasdaq really is.  If the Nasdaq fails to hold from bearish news then we know that they are not as strong as they appear to be.  If the news is bullish then we could see a big rally across the board.  (see charts)

Have a great week everybody and I look forward to seeing what happens.  

Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day) Purple (150 day smooth avg.).  Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year. 

E-mini Nasdaq

S&P Cash

Dow Industrials

Transports

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