The Stock Market Averages Prior to the Fed Chair Testimony This Week

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
March 6th, 2023

3 mins read
Figure 1: 90-Day Candle Chart DIA
Figure 1: 90-Day Candle Chart DIA
Figure 2: 90-Day Candle Chart QQQ
Figure 2: 90-Day Candle Chart QQQ
Figure 3: 90-Day Candle Chart SPY
Figure 3: 90-Day Candle Chart SPY

When you look at all three of the ETF’s for the Top 3 Major Stock Market Averages do you see similarities?

Here are a few that need emphasis.

  1. Their days closing price is at or near an old support price that may make for this being new resistance.
  2. The day’s canelé for each can be considered Shooting Star Candle Pattern.
  3. Their pivot low price has either a Darknet B Bullish signal or a bullish Japanese candle reversal pattern.

Here is how a “Shooting Star” is interpreted.  It is considered a type of reversal pattern, which mean it could bring about a stock’s price reversing its previous course of trading.

Int his case it happened at a top or a resistance price point, so the expectation is for the security to trade down.  If this pattern happened after a downtrend or at a support area it would be considered an Inverted hammer.

In either case it is made up of a candle with a small lower body, little or no lower wick, and a long upper wick that is at least two times the size of the lower body, (the term wick could also be termed a shadow of the candle body).

2 od the 3 have a Darknet B or Bullish signal, which indicated a prior support from where the security rose in price.

The other one, QQQ, saw a Bullish Engulfing pattern form and be a support it bounced higher from.

In all three cases it seems a reversal in price is possible.

There is cause for a bit of calm here though as its possible the markets are not making a further move higher off recent pivot lows, nor are they fully selling off.

Fed Chair Powell testifies Before Congress This Week

Looking at the economic calendar on www.marketwatch .com we see Fed Chairman Powell testifies before the Senate on Tuesday and the House on Wednesday.

So he is on the hot seat for the net two consecutive days and all eyes and more so Ears will be open to see what he has to say regarding their assessment of inflation and what actions they will need to take to continue to combat that.

Traders may be ‘keeping their powder dry’ so to speak.  Meaning they may not want to take a fresh option position due to the uncertainty of whether they will be hawkish or dovish and that may be why we see a narrow range day of trade.  Volume these next two days may be a bit lower than average as well due to the trepidation to make a definitive call on market direction.

Come Thursday or Wednesday after the 2nd day of testimony traders will have a better idea on their directional bias and likely step up their trading activity then – as will we most likely.

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