The most important indexes had big gains after the Fed announced an interest rate hike aligned to the Market expectations and the comments weren't as hawkish as they could have been.
After today's movement, there can be some relief that the 4,191 weekly support keeps holding after multiple tests since April/2021. When tested, this support has generated even small reaction rallies that could be opportunities for certain swing or day-traders (green arrows in the screenshot below). Unfortunately, the closer it gets to 4,600 the higher the selling pressure the index faces (orange arrows in the screenshot below).
From my perspective, today's movement can be easily erased during the rest of the week by any bad news. Bad earnings, inflation, the Ukraine war, Covid, etc. Movements like the one we saw today can trigger the Fear of Missing Out (FOMO) and since anything can happen in the Markets there is a small chance that this rally could turn into a powerful uptrend.
The scenario that I see more likely though, is that the rally will be crushed by the Bears if not this week, the next one. Even if the indexes rallied around 3% today, we are still at the same price level we were in April/2021. You can encapsulate 80-90% of the bars in the daily chart of the S&P 500 (screenshot below) between 4,191 and 4,775.
If I'm wrong and there is real force from the Bulls behind this rally, there won't be a problem that the index moves past 4,600 in the next few days. This chart is looking like a long pause in the weekly uptrend, or a distribution/topping phase.
In terms of the New Highs and New Lows numbers (NH-NL), they aren't confirming the upward movement yet. In fact, the New Lows in all the timeframes increased compared to yesterday's numbers. For the rally to continue, at least the New Monthly Lows (column H) need to decrease significantly by tomorrow.
Even if today's movement was powerful, that doesn't mean that the Market is ready to completely change its direction. Trying to pick a bottom is a very risky business, rather than thinking how much money you will miss if you don't enter right now you could think how much money you can lose if the decline continues.
