Compression Week in the Stock Market - Beyond the Chart

Compression Week in the Stock Market

compression week

The big event for the stock market this week was the Federal Reserve Meeting on Tuesday-Wednesday. On Wednesday the Federal Reserve announced no change to interest rates but did say they plan to wind down their $4.5 trillion balance sheet starting in October. 

This is the balance sheet that they created thru the series of quantitative easings since the Financial Crisis.  This $4.5 trillion balance sheet is made up of treasuries and mortgage backed securities. 

So it is not unusual for the stock market to become a little cautious and tight during a Fed meeting but this tightness continued thru the remainder of the week. When you see the Dow Jones Industrial Average (DJIA) weekly chart in the video below, you will see why I am calling this a compression week.  It is one of the smallest weekly trading ranges in several months. 

Compression and expansion seem to cycle back and forth in the stock market.  So now that we have had a compression week, I am watching for some fireworks to happen in the market…it may take a couple of weeks.

This is like a flag being waved saying ‘hello, the market is telling you something’. Like a big cat watching you. You never know when if is going to explode into action.

In the video I review the DJIA daily and weekly charts, look at one of my key indicators and review 3 key ETFs.  This is just a brief snippet of what I provide my Insider Members in the Weekend Market Analysis video.  Also in today’s video I review Apple (AAPL), Facebook (FB) and Netflix (NFLX). 

 

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