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Will the 11th time be the charm? SPX and DJIA should test their 200-day moving averages again, but we’re still waiting for COMP. At 6844, its SMA200 is still 3.6% away. This leaves us with multiple downside targets: the safe picks, where support holds — or the more interesting ones (my preference) that would correspond with COMP’s 3.6% slide [see: The Coast is Clear – For a Drop.]
Then, there are the drops which would result from a true hands-off approach by central bankers — a good 6.8 – 18.8% below current levels. The FOMC punted on yesterday’s rate decision, meaning their “hawkishness” isn’t exactly unbounded.
Bonds and currencies responded as expected [see: Apr 27 Update on Bonds.] But, the dollar and TNX have further to go before erasing their recent exuberance.
In a perfect world, today would put a good scare into the markets, and tomorrow or early next week would be truly alarming.
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