Market Rallies Despite Powell Speech Looming


Simpler Trading Team

3 min read

Retail traders and Wall Street woke up ready to go today.

The psychological level of 3,900 on the S&P 500 was once again in play as the market opened. The first bullish sign arrived as the bulls took no time defending the 3,900 level and sending the market higher.

The buying pressure was intense and persistent throughout the day without many breaks. The first opportunity bears had to show their presence was at an internal level known as Point of Control (POC). At POC, the bulls took a break, and the bears took over… briefly. 

Gauging a trend using VWAP

When an intense trend day occurs, the Volume Weighted Average Price (VWAP) will support the trend more often than not. The support of VWAP today held on both the Nasdaq and S&P 500 and helped send the market continuously higher.

When the price on both indices settled at VWAP, it presented an opportunity to get positioned before the market spiked further. Once the support of VWAP was validated, the stock market never looked back, continuously progressing throughout the day. 

Following the moving averages to the upside

With the market moving to the upside, it is important for traders to look at where the market could possibly be going. Some of the simpler targets to the upside when looking at the S&P 500 futures include psychological levels such as 4,000. Other than psychological levels, key moving averages such as the 50-day simple moving average (SMA) and the 21-day exponential moving average (EMA) should be considered.

You will hear many traders refer to these key moving averages as simply the “50” or the “21” in the various Simpler Trading online  chat rooms. These levels are always important to note on stock charts when creating a roadmap and game plan for the trading day.

Today, the 50-day SMA was at 4,024.75 and the 21-day EMA was at 4,058.25 on the S&P 500 futures chart. Each of these levels are viable targets to the upside in the coming sessions.

To the downside, the easiest target would be a retest lower at the 3,900 level that has been in play the last handful of sessions. 

That lower level may come into play early tomorrow with Federal Reserve Chairman Jerome  Powell set to speak at 9:10 a.m. Eastern. This will be before market open, and traders should have a market game plan and targets in either direction. Powell’s  words can sway the market in either direction.

Big money on Wall Street players always takes the opportunity to try and swing the market in their direction after the information is digested from the speech. With the speech taking place prior to the cash session open, be ready for volatility out the gate. 

Market finishes strong in mid-week session

During the last hour of the session on Wednesday it was more of the same for the stock market.

There was a continuous cycle of grinding higher with no significant pullback. This price action provided a much needed win by the bulls. Today marks the first significant today for the bulls in recent weeks. The Nasdaq ended a seven-day losing streak.

Stock market books positive gains

Both the Nasdaq and the S&P 500 were solidly positive to close the day. The S&P 500 futures closed up 1.80%, gaining 70 points, while the Nasdaq futures closed up 2.10%, a gain of 242 points. The Dow Jones joined in the gains, adding 428.61 points, improving 1.38%.

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