Post Powell Consolidation

After yesterday’s volatile trading session, stemming from Federal Reserve (Fed) Chairman Jerome Powell’s speech, the markets took a respite. 

It’s not uncommon for the markets to take a day off following a huge move in the prior trading session. For most of the day, the markets traded in a tight range, just below the psychological level of 3,800 on the S&P 500 futures.

Looking back at Wednesday’s Simpler Insights article, Powell Sends Market On Rollercoaster Ride, the 3,800 level was described as the new line in the sand, and it proved to be. 

A new level of resistance for S&P 500 futures

The morning session opened above 3,800 but moved lower at an expeditious pace, finding support just below 3,800. After the market briefly probed 3,800, it was met with modest selling pressure. The market was hesitant to spend much time above this pivotal level for the remainder of the day. 

The price action at and around 3,800 is a key indication that this level will serve as resistance and should be noted in a trader’s game plan. As the market grinds lower and levels of resistance are established, it gives the appearance that bearish sentiment is in the air. 

In order for the markets to show any bullish sentiment, price action will need to move significantly higher, breaking through the levels of resistance in a meaningful way. 

Gameplan to end the week

As we look forward and onto Friday, the levels that should be considered for any traders game plan are the following:

On the upside, the smaller psychological targets come into play, such as 3,825 and 3,850 on the S&P 500 futures.

On the downside, the smaller psychological targets also come into play, such as 3,775 and 3,750 on the S&P 500 futures. 

Closing bell

To end the session in power hour, the market saw the most significant move higher of the day. The market had slowly worked its way back towards the line in the sand, 3,800. 

After briefly trying to reclaim the line in the sand, the market was harshly rejected, sending it lower. As we look into the future, it is safe to say that the path of least resistance is to the downside, as long as the S&P 500 futures are below the 3,800 level. 

Slow, but steady selling

At the market close today, the Nasdaq and the S&P 500 were negative to end the session. The S&P 500 futures closed down .76%, losing 29 points, while the Nasdaq futures closed down 1.17%, a loss of 139 points. The Dow followed, closing down .15%, declining 46 points.