Mid-Week Review

Following the Fed announcement yesterday at the FOMC meeting that the economic recovery is not as robust as had been hoped and that the Fed would monetize the debt by buying treasury notes to keep interest rates low the futures market began to sell off over night resulting in a gap open lower this morning. This announcement comes on the heels of Friday's worst than expected jobs report. What can be seen from the chart below is island top formed by the gap open higher on August 2 noted by the blue oval and today's gap lower as noted by the pink oval. Island tops are a topping sign before the market moves lower. Currently the futures market are pointing to a lower open tomorrow. Also note the five wave count. How far down the market will go we will just have to wait and see. Click on chart to enlarge.