Hey Market Pilot,
Last week was the Jackson Hole symposium where we heard another speech from Jerome Powell who is the 16th chair of the Federal Reserve. It was pretty much assumed that he wasn’t going to rock the boat or change course, but would the market be happy with the status quo?
The market pulled back slightly on Thursday going into Friday’s speech. While that might have been taken as people hesitating or pulling bids before the news, in the Moxie Indicator™ world I had been guiding the members that we needed to see a dip to test support or bring price closer to that support. I typically reference the hourly chart for this. Like with most of the indexes I wanted to see price pull back into the 50 simple moving average (SMA). That’s what we got Thursday, and then the support was confirmed Friday when price rallied back up in a strong manner.
Even the internals supported it with healthy order flow and a majority of stocks positive for the day. It seems for now that the market is happy with the way Powell promised to keep things going on course in a supportive environment. One significant place I saw responding to the news was the Russell 2000 ETF (IWM) and Innovator IBD 50 ETF (FFTY). Both of these indexes ran hard after a quick little Thursday pullback and the FFTY is clearly looking strong.
I like what this means and I believe this should help market breadth get back on track. I am curious to see what this week brings and see how participation might have changed throughout the market. September is a seasonally bearish month, but summer is also winding down so people are getting back to their normal routines and hopefully starting to contribute more to the market.
Your Profit Pilot, TG