The Nasdaq sold off on the Fed's 2 p.m. ET announcement of its first rate hike since '18, only to reverse a half-hour later and gain 3.42% into the close. In all, the index surged 3.77% on the day.
Today's market had "growth stock" written all over it. Not only did the Naz outpace the S&P 500 by 3.77% to 2.22%, but Ark Innovation (ARKK) vaulted 10.39%.
Moreover, volume was heavier on the Nasdaq than on the NYSE. Breadth was strong, one indication being the cap-weighted QQQ lagging its equally-weighted brethren, the QQQE. Advance-decline ratios also were quite solid.
With that said, bear market rallies often are led by the stuff that got knocked down the most in the preceding decline. So, while it is a positive that growth was leading, it is merely a step in the right direction, and not something to hang our hats on.
While technology was a top performer among the 11 broad sectors, cyclical issues lagged. As time goes on, we will see whether this spurt in growth stocks may be the market discounting an economic slowdown in H2 or something less meaningful.
The market rally has not progressed enough for us to consider longs. We will be watching to see if the averages roll over which might offer some short-selling opps.
In summation, if this was an 8%-12 intermediate correction, we would be more opportunistic about seeking long opps. However, given current conditions, we should not be in a hurry to wade back into the pool. Cash is king.
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Bread and butter pullback: Pt II (15:09)
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Bread and butter pullback: Pt IV (30:16)
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