Continues to Wait for Jerome Powell

I do think that a big move is coming, but I would not be surprised at all to see a lot of noisy shakeouts over the next couple of days, so you need to be very cautious.

The S&P 500 E-mini contract has done very little during the training session, as we sit just below the 200 Day EMA. The 200-Day EMA is an indicator that a lot of people pay close attention to, and therefore it does make a certain amount of sense that we are hanging around in this area. It is also worth noting that we are between the 50-Day EMA underneath, and the 200-Day EMA, suggesting that we are getting ready to squeeze.

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The size of the candlestick leaves a little bit to be desired, so at this point in time, I think we are simply waiting to see some type of decision from Jerome Powell and how the market reacts to any statement that he makes. I think the market will try to find some type of reason to make his statement dovish, and clearly, Jerome Powell is not good enough for communicating to make that not happen. It’s very common for the market to read what once into a statement, take a little bit of time, and then come back into the fold again.

Noise Ahead

• I think it’s very likely that we continue to see a lot of noisy behavior, and therefore I think the volatility is probably only going to get worse.
• Clearly, Jerome Powell has made a career of doublespeak, but now that the reserve governors are not out there day trading, they may not have the same drive to support Wall Street.
• I do think that a big move is coming, but I would not be surprised at all to see a lot of noisy shakeouts over the next couple of days, so you need to be very cautious.

If we break down below the 50 Day EMA, then it’s likely that we go down to the 4000 level, which of course is a large, round, psychologically significant figure. On the other hand, if we turn around and go to the upside, it’s obvious that the 4300 level is an area where we have seen a lot of selling pressure, so I would anticipate that the area could be rather resistant to upward pressure. This is a market that I think continues to see a lot of noisy behavior, and therefore position sizing will be paramount.

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