After Rebound Fades, Jerome Powell Has Chance to Drive Strong Move
The stock market's two-day rebound ended in an ugly way and conditions could lead to a strong move after the Fed chair's conference.
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The market’s two-day rebound ended in ugly fashion on Tuesday. The S&P500 gave back all of Monday’s gains plus a chunk of Friday’s. Breadth was very poor at more than two-to-one negative.
The Nvidia NVDA technology day received a lot of attention, but it didn’t do much to help the stock, which finished with a loss of more than 3%. The Magnificent Seven MAGS were the laggards again, with a giveback of 2.5% and a breach of the lows that were hit last week.
It isn’t surprising that the market could not produce a stronger V-shaped move. There hasn’t been any significant shift in the issues that helped to cause this corrective action in the first place. Tariffs are still an issue, and there is little clarity about the strength of the economy. The biggest concern is falling consumer confidence, which impacts retail sales.
On Wednesday, Jerome Powell will weigh in on interest rates and will provide some insights into the economy and inflation. If he says the right things, conditions are good for a strong move, but it is very likely that he will repeat that the Fed is data-dependent and may not be the economic cheerleader that the bulls are hoping for.
The good news is that the indices are holding above last week's lows and have a shot at a follow-through day, but it will all depend on whether Powell helps to ease some economic fears.
It is an extremely difficult market to trade right with a lot of poor technical action. There are opportunities to develop, but timing is the key, and patience will be required.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
