Buyers
The equity index arena watched the buyers continue to hold their firm grasp over the market as institutions have been aggressively taking in contracts. As for the trade, the SPH printed a high of 1379, which is the high print from December 14. What this shows is the market nearing the end of its retracement cycle from the vicious decline seen from 12/14 to the Fed rate cut day.
How does a trader take advantage of this? Well, I think most of the smart money is beginning to move to the sidelines. Let me explain. The trading rally is essentially over. While it does not mean we won’t press higher, it does mean the outpaced gains we saw over the past couple weeks will begin to contract. The aggressive traders and hedge funds that were buying pre-Fed cut are now exiting ahead of the FOMC meeting. Who’s buying? Mutual funds are putting much of their money to work and driving this market higher. But remember, they have a longer time horizon than the players I outlined earlier.
To make a long story short, if long with solid gains, I would look to exit before the FOMC announcement on Jan.31.