From Wednesday’s Notes entry:
Got to love FOMC week, as the machines always seem to get up to something. In this case the hunch I had per the above is starting to play out, internally.
Here is the current status:
Defensive XLV/SPY ratio is bouncing from an area that may have contained its downside and the QQQ/SPY ratio is failing the 50 day moving average… again! That should not happen if risk is to remain “on”. There was no need for a second dunk below the SMA 50.
The bottom line is that it is FOMC week and the machines are doing their thing. It could just be the usual mayhem, and I had reservations about this week ahead of time, as you know. If this risk-off signalling gains momentum, and if we are to have more of a year-end rally, it could well be compressed into Santa week into New Years. It should not need to be stated, but Santa is no guarantee either.
Meanwhile, a short-term defensive stance is warranted per the chart above. Just as the short-term signal was risk-on per the Dec. 12 NFTRH+ update.
