EDIT: caption should say 2:30pm WEDNESDAY.. not thursday. details, details...
As expected, the rally has cooled and consolidated below the top trendline of that hypothetical channel I drew wks ago. It will all now come down to the words of one Jerome Powell. I think if he gives this rally his "blessing", then earnings just have to be OK not spectacular for the rally to persist at least another week.
If the market likes what Powell has to say:
1) 271.10 easily I think next week as we will finally break that large downward hypothetical channel. The white trendline from Oct won't pose much of an issue IMO as this consolidation has gathered enough momentum to push forward.
2) We're sitting at the bottom of both rising channels so actually not a bad time to be a bull... (given Powell's careful w/ his words)
3) I still don't think this rally will just keep going up without a significant pullback. Watch for some kind of crazy gap up day on trade news to sell at the top, just like early December.
If the market doesn't like what Powell has to say:
1) Both rising channels that have been the trend for the entire rally will break and we'll see 259-260 in a heartbeat.
2) If FANG earnings are good, we might meander there a bit before moving back up or continuing down...
I'm leaning slightly toward the latter. I think the market is expecting more dovish speak and possibly a sign they're ending QT early. That's a pipe dream based on that WSJ article which actually just rehashes a buncha stuff from the Fed minutes. If Powell says "everything is as it was before", it's possible the market construes that as a hawkish tone.
Either way, set your alarms for 2:30pm and get ready to pull the trigger. I'm currently riding an options straddle w/ longer term puts and weekly calls because even the rally persists I think it'll be shortlived...
As expected, the rally has cooled and consolidated below the top trendline of that hypothetical channel I drew wks ago. It will all now come down to the words of one Jerome Powell. I think if he gives this rally his "blessing", then earnings just have to be OK not spectacular for the rally to persist at least another week.
If the market likes what Powell has to say:
1) 271.10 easily I think next week as we will finally break that large downward hypothetical channel. The white trendline from Oct won't pose much of an issue IMO as this consolidation has gathered enough momentum to push forward.
2) We're sitting at the bottom of both rising channels so actually not a bad time to be a bull... (given Powell's careful w/ his words)
3) I still don't think this rally will just keep going up without a significant pullback. Watch for some kind of crazy gap up day on trade news to sell at the top, just like early December.
If the market doesn't like what Powell has to say:
1) Both rising channels that have been the trend for the entire rally will break and we'll see 259-260 in a heartbeat.
2) If FANG earnings are good, we might meander there a bit before moving back up or continuing down...
I'm leaning slightly toward the latter. I think the market is expecting more dovish speak and possibly a sign they're ending QT early. That's a pipe dream based on that WSJ article which actually just rehashes a buncha stuff from the Fed minutes. If Powell says "everything is as it was before", it's possible the market construes that as a hawkish tone.
Either way, set your alarms for 2:30pm and get ready to pull the trigger. I'm currently riding an options straddle w/ longer term puts and weekly calls because even the rally persists I think it'll be shortlived...
