The Financial Markets Didn’t Need Both Days of Fed Chair Testimony to Sell Off

Tom Gentile

Posted in
Daily Report

By: Tom Gentile
March 7th, 2023

3 mins read

A look at the ETF’s of the three major indices today post day 1 of 2 days of Fed Chair Powell testimony.

Figure 1: 90-Day Candle Chart DIA with Emphasized Trading Range
Figure 1: 90-Day Candle Chart DIA with Emphasized Trading Range
Figure 2: 90-Day Candle Chart QQQ with Emphasized Trading Range
Figure 2: 90-Day Candle Chart QQQ with Emphasized Trading Range
Figure 3 90-Day Candle Chart SPY with Emphasized Trading Range
Figure 3 90-Day Candle Chart SPY with Emphasized Trading Range

The reason these same three ETF charts are shown today is to emphasize what could be deemed a new trading range for the big three indices.

A trading range is where there is a consistent price support level and a consistent price resistance level, usually more clearly seen if the range is sideways/horizontal in nature.

Fed Chair Testimony Before the Senate Today 2023-03-07

What the market got from Fed Chair Powell today was a hawkish toned testimony that spoke to inflation still being a high-risk scenario and to combat that from happening they may have to accelerate the pace of their rate hikes.

The phrase we were hearing today was, ‘higher for longer’ pertaining to what may have to be their game plan.

A concern is the Fed recently raised rates a 1/4 of a basis point, which gave indication things are improving enough they were able to feel confident in dropping the amount in which they raise rates down from a 1/2 basis point.

Today’s testimony hints at the prospect they may have to move back to a 1/2 point hike and that spooked the markets.

Fed Chair Powell testifies before the House tomorrow and by law his opening statement has to mirror the one he used before the Senate today.

Their doesn’t seem to be an expectation that anything in the question and answer time spent before House is going to change the genesis of what was said and testified today which may bring more selling or folks, Bulls and Bears don’t act too decisively tomorrow.

There is a chance no new info tomorrow may give bulls a chance to say the worst is behind us for now, we know what we are facing and we can get back into the market with things being on sale.

We won’t really know which scenario will play out, but what is shown in the chart images of the three ETF’s today is that we now have a trading range to monitor.

Any existing positions need to be monitored to their stop loss plans you should have in place.

Then, for new actions to take, I would feel better initiating bullish options trades with a breach of resistance or with new bearish positions I would need to see a breach of support.

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