Will Powell Save Us?
Folks are starting to call it the Powell Put and are hopeful that the Fed will do what it takes to save the market.
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All it took was a rally back to where the S&P was on Monday for folks to start using the phrase “Powell Put.”
Oh, I know, it sounds great, the alliteration, but there seems to be a market obsession with the “Trump Put,” too, which is not nearly as catchy. Folks spent the month of February fretting over this put, and now after the Fed meeting, they are all in thinking it is there again after giving up on it in February. It’s anecdotal, but it is sentiment.
So, while sentiment using the Investors Intelligence readings released this week (they showed very little change, so there are still more bears than bulls) is still too bearish, the chatter is likely to quickly change to this view that the market can’t go down because Chair Powell will save it. I will wait for the survey data to change, but I can tell you now it is likely to do so.
Although, there is one other narrative that has emerged. Investors are on edge waiting for the April 2nd tariff announcement. My experience is that when all eyes are focused on a particular date, the market will do something in advance of this date, but it’s still two weeks away, so we have plenty of time to fret or rejoice, but I’ll watch to see if the narrative shifts.
Aside from that, the indicators did not change much despite the rally. I know it may feel to many that the rally just started, but most of the indexes have been green for four of the last six trading days. That is what has helped push the Overbought/Oversold Oscillator to the zero line for the NYSE. Nasdaq is still under it. So, we are not yet overbought.
Breadth was good on Wednesday, as it has been for most of the last few weeks. But we can see a minor little shift. Breadth was better on Monday at +1725 when the S&P was up 36 then it was on Wednesday (+1240) when the S&P was up 60. Probably because the index movers rallied on Wednesday, and we know when they rally, there isn’t a whole lot left for the 493.
However, all this good breadth has turned the McClellan Summation Index upward. A net differential of -1400 advancers minus decliners on the NYSE will stop it in its tracks, but up is up.
Let me do a follow-up comment on the chart of IWM that we discussed in full yesterday. The two moving averages are still about a point apart, and they come in around 217-218. Traditionally, we would consider that resistance. Now they are downtrending, so they might be lower a couple of weeks from now, but please recall that we spent a lot of time in the last few months watching the 215 support on the IWM. For me, that is the resistance area.
