Turnaround Tuesday: Will the Fed be Naughty or Nice?

December 17, 2024

Mish's Daily

By Mish Schneider

While NASDAQ 100 and many of the Mag 7 went on to make new highs, RSP the S&P 500 Equal Weight ETF shows a different picture.

The Daily chart of QQQs does not exactly suggest a turnaround Tuesday after making a new all-time high on Monday.

However, with today’s inside trading day within Monday’s range, we have to consider the next chart or that of the equal weighted S&P 500 RSP.

One instrument or another will turn around soon.

Either the QQQs will fail Monday’s low and trend lower as we continue the week given the Fed decision is on tap,

The RSP will catch a bid and at the very least, bring the conversation back to a healthier market that is broadening out.

Wednesday the Federal Reserve is expected to cut rates by 25 basis points.

Considering that the belly of the market indicates poor breadth despite the growth stocks (which have proved to be more of a flight to safety), the RSP chart tells us a lot.

Out of the last 11 trading days, RSP has declined on 9 of the days. And on the 2 days RSP did not decline, the rally was meager keeping the downtrend intact.

RSP is well under the 50-DMA and into a caution phase. The slope of the 50-DMA though is still positive which means, we could still see a move higher back over the 50-DMA ending this decline.

However, unless we see RSP close over the 50-DMA for 2 days in a row, consider the implications.

QQQs might give it up or at least correct.

The sectors of the market that were beginning to improve could deteriorate and Santa, whom everyone is expecting, could head south, but without a sleigh full of gifts.

I am currently working on the Outlook 2025, which will be my best one yet as I combine market and sector predictions along with actionable chart analysis.

This Daily is my last one until after the holiday break.

Please check our Youtube channel for Mish’s recent media appearances, which will continue to update.

Have a wonderful Holiday-look out for the Outlook 2025 coming soon.

Educational purposes only, not official trading advice.

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

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