S&P 500 confirmed the daily outlook yesterday and did really well. The signs before the close also favored bullish entry into today. VIX kept declining, UVXY confirming – no surprise that the bears were weak intraday, and likely would first have to deal with a spiking stock market before we see a repeat of the latest Fed minutes release (daily stall followed by reversal). CBOE put/call ratio is not too much out of balance, favoring a nice move today. USD is unconvincing given the delicate balancing the Fed has to do while still appearing (and crucially acting) resolute. Tough job to regain inflation-fighting credentials when the „transitory‘ horse has left the barn many quarters ago. Given the continued weakness of the sellers going into the Powell speech, the nimble intraday traders among you may be tempted to join the buyers temporarily, eyeing the exit door should Powell truly surprise and deliver credibly.

As written yesterday:

(…) The risk-on move won‘t be shattered by the upcoming (Sep start is almost here) of the $95bn balance sheet shrinking operations. I think the markets would be willing to buy into the dovish interpretation as readily as July‘s Powell Fed funds rate being near the neutral rate remark, and this jubilation can possibly stretch through Monday or until VIX hits the 21.50 – 21 area. While Treasury yields are rising, the stall speed of the USD hints also at a dovish reaction before the big picture takes over.

To feel the daily pulse, let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full-scale article features good 6 ones.
 

S&P 500 and Nasdaq Outlook

S&P 500 is positioned to extend gains, the pullback turned out to be a healthy one only as another attempt at the 200-d moving average is possible. See the modest rise in volume. 4,250 can be easily beaten today.
 

Credit Markets

HYG gathered speed before the close, setting the tone for a bullish showing today – openly doubting the likely hawkish message ahead – it‘s about the ability to execute. That goes for long-dated Treasuries to a good degree too even if the Sep tightening expectations continue to favor a 75bp hike.
 

Bitcoin and Ethereum

Crypto is the only fly in the daily bullish ointment. The chart is still ugly (bearish).

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