As the next FOMC meeting approaches volatility declines when traders, once again, are overly optimistic and have a case of “Fed Anxiety” while they wait for the Fed to make a decision on interest rates. Regardless of the Fed’s announcement, plans are already in place for a market decline. This can be observed with the following:
- There has been a significant decline in activity of extremely large block trades since mid-December 2023 in the “Magnificent 7”.
- Percentage of S&P 500 stocks above their 50 day moving average has peaked and started a decline.
- S&P500 Bullish Percentage Index has peaked and started a decline.
- CNN Fear & Greed reading continues to stay in the Extreme Greed Range.
- 10-Yr Note futures traders are holding larger short positions than they were on September 25, 2018 when the S&P started a 19% decline going into December 2018.
- The S&P500 is in a rising wedge that is similar to what occurred in 2022 and 2023.
Stock charts courtesy of StockCharts.com.
