The $SPY pulled back to the neckline of the inverted head and shoulders pattern that we have been observing and so far, it looks like nothing more than a pullback but we want to wait for further stabilization in this area before getting aggressive with new purchases. With the 50 day moving average just below the market at 141.85 it would not be a surprise to see that level tested in the next day or two as the short term profit taking which developed after the Fed meeting continues to be absorbed into the market. As the market settles down we will want to see the 20 day moving average come up through the 50 day MA and the 50 DMA flattens out, this configuration typically confirms the strength of the market.

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The $QQQ has established a clear level of resistance at 6640 which if taken out will likely lead to a fast move up towards 68-6850. This resistance level is also the basis of the inverted head and shoulders pattern we have been observing setup over the last week. It would be troubling to see this market drip below 6430 as that has been decent support over the last three weeks, if it were to lose that level it would put this recovery in jeopardy. The bad news is the uncertainty of the range, the good news is that once the range breaks we should have a decent move.