Powell on Tap | A Tip on Fading Intraday Rallies

Plus a setup on CRM and SMCI.

Technical Edge — 

• NYSE Breadth: 35% Upside Volume 

• Advance/Decline: 35% Advance 

• VIX: ~$18.75

Today is Day 1 of the Powell testimony. I’m not sure how that will be handled in regards to the market, as it’s not a prepared speech to economists and market participants. 

There will likely be your typical headline-algos that rip-and-dip the S&P based on some of Powell’s responses. 

If we can get some flushes and rips to the edge of the range, some nice reversal trades could be in play. Otherwise, try to drown out the noise and just trade what’s in front of you. If that’s too hard, always remember that you don’t have to trade — especially when the environment is not ideal for your style!

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Note: Yesterday’s fade was not hard to see coming, with the way the 10-year yield was rallying and as the VIX was up over 1% even amid the S&P’s rally. Keep those in your back pocket. At best, it suggests to use some caution and trade smaller. 

S&P 500 — ES 

A nice multi-day bounce so far, but what we need is clarity. 

Essentially, is this the start of another leg higher or simply an oversold bounce on declining volume and into the 50% retracement of the decline?

From here, look to see if the ES can clear 4067, opening the door to yesterday’s high at 4082.50, then potentially 4100. 

On the downside, initial support is down in the 4047 to 4050 area. Below that and the 4025 to 4030 area could be on the table. 

SPY