Major averages dropped yesterday on larger, above average volume. The S&P 500 got support at its 10-week moving average. Two reasons were cited for the selloff: First, Fed Chairperson Yellen said they could lower rates again should they hike in December. Second, the European Central Bank lowered rates but at the low end of expectations sending European markets lower.
The markets seem to be telegraphing it wants more quantitative easing from central banks such as the ECB but that it also wants reassurance from Fed Chairperson Yellen that a rate hike is a sign the economy in the US may be turning a corner. Yesterday, the markets got neither. The ECB disappointed by not easing enough, and Yellen reiterated that any rate hikes would be done slowly as needed, and could even be reversed.
Regardless of the reasons behind the selloff, all that matters is price/volume action when it comes to taking profits and keeping stops tight in context with the chart and general market.
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