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TVO Market Barometer 9-25: Will the Fed lead to more red?

Volume fell again on Tuesday as markets continue to settle after a volatile quadruple witching session last Friday. Even though Freaky Friday (which also included SPY ex-dividend) delivered an overall volume boost of over 60%, big institutions actually participated more on Thursday’s across-the-board accumulation day.

And we all should know by now that when there’s accumulation, a shakeout will soon follow. SPY wiggling around 291 may not be that much for most bears to sink their teeth into, but it’s still a shakeout all the same.

We bought the all-time high breakout last Thursday (because sometimes the shakeout is not always that prompt and things initially can indeed go much higher) and ended up closing out our SPY calls at Tuesday’s open for exactly break even (almost to the penny). Even though HG says there’s a 55% chance markets will go SIDEWAYS UP on Wednesday, not all of our strategies share the same level of probability.

The exit signal also looks to be acting as a warning for us to lighten the load while markets continue to digest last Thursday’s triumphant move. Meanwhile, we’re still long some in the short-term, and with the “no-surprise/priced-in” Fed delivering their statement on Wednesday, along with TVO’s recent shift to BUY mode, the long side is still the place to be until proven otherwise. -MD

Sentiment: EAGER – Markets are in accumulation mode and big institutions are buying at a slow and steady pace.

Volume: -3% – Today’s volume was lower than the previous session.

Real Feel: COOL – Bulls and bears were at a stalemate for the session.

Cycle: OVERSOLD I – Retail investors are uncertain and very light in their holdings.

Portfolio: BUY – The market is healthy and it’s a good time to contribute to long-term investments.

Next Day Move: SIDEWAYS UP - The probability that SPY will close positive in the next session is 55%.

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