Major averages sold off yesterday on higher volume with the S&P 500 closing just under its 50-day moving average, and the NASDAQ Composite bouncing off both its 10- and 40-week moving averages as they form a golden cross, a theoretically bullish event.
Nevertheless, the number of distribution days together with the lackluster go-nowhere performance of most of the leading stocks implies more chop-and-slop ahead, or possibly further downside. So despite December being a seasonally strong month, never take your eye off the ball. Keep your stops extra tight since the market could fall further as it did last December before it found its footing.
CME Fedwatch now puts the odds of a rate hike at 87% when the Fed meets in December, with the majority betting on a 50 basis point hike.
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