Jerome Powell was trotted out to the media and said exactly what anyone paying attention to market signals knew he’d say. The Fed is still in inflation fighting mode in order to try to kill the thing it created, a big inflation problem that is hampering the economy and threatening to go or already having gone stag. Slight inflation pressure easing aside, they are not messing around and as stated all along the Fed will not incinerate itself in an inflationary bonfire. They would rather tank the markets than have that happen. Full speed ahead, Jerome.
On that note, let’s use SPX as an example for many other indexes and markets. Today’s media blitz has driven SPX back down to support. But it has not ticked a lower low to the lows made earlier this week. Hence, at this point it’s just a media event mainlining pure noise about something that was already known into the markets.
But if indexes start making lower lows (in this case, below SPX 4119.97) the prospect opens up that the bear market rally is over. If it holds here the rally can continue as Powell rides off into the sunset.
Just a little parameter watching for your consideration.
And it’s gone… Just curious, when I look at my S&P daily I see the possibility of 50dma test, coincidental with a trend-line test, which would make a higher high than 26Jul. Is your prospect of a dead rally based on more Jerome-chaos timeline and macros than technicals?
A drop to the SMA 50 is exactly what was noted in yesterday’s E-mini update. So if today does not put tails on some of these breakdown candles then I think it’s going to the SMA 50 with an increased probability that the rally has already ended. At least for broad stonks.