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- The NASDAQ 100 has done very little during the trading session on Wednesday as we continue to sit just above the 50 Day EMA.
- This is a market that is going to be waiting on Jerome Powell and his speech on Friday.
- The Jackson Hole Symposium features several central bankers and speeches that will give us an idea of where their thoughts are.
If we were to break down below the 50 Day EMA, then it’s possible that we could unwind down to the 12,500 level. Underneath, then the market could open up a move down to the $12,000 level. On the other hand, if we turn around a break to the upside, then the 200 Day EMA is sitting at the 13,500 level. This is a market that had recently broken out, and now it is looking for an opportunity to find some type of support underneath to turn things to the upside. We are also between the 50-Day EMA and the 200-Day EMA, which typically signifies that we are about to see a squeeze.
Traders Worried About the FED
The market breaking down will more likely than not have a lot to do with the speech coming out of Jerome Powell on Friday, which if interpreted as extraordinarily hawkish, while traders worried about plenty of downward pressure on the economy. Furthermore, interest rates could continue to be a major driver of war we go next, so if interest rates rise after that statement, it will make people more interested in that asset as opposed to stocks. High-growth technology companies tend to follow the cheap money, so it needs to see cheap money and low interest rates in order to take off.
I think the only thing that you can count on Thursday is a lot of lackluster trading, and unless something is leaked, I anticipate that everybody is going to be waiting around for that Jerome Powell speech at 10 AM on Friday. Market participants are waiting to see whether or not the Federal Reserve is looking to pivot, which is a story that Wall Street has told itself. At this point, people are completely ignoring what the Federal Reserve says, so it’s not necessarily going to determine that we are breaking down the market. After all, Wall Street will find some type of narrative to help. However, if Jerome Powell is aggressive in his speech, we may actually see a selloff on Friday. Thursday is about waiting.
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