Market In State Of Chop Ahead Of Jackson Hole


Simpler Trading Team

Aug 24th 2022  .  3 min read

Coming into the cash session today, there was relatively low volatility in the market with no dramatic swing in either direction from the bulls or the bears.

The lack of control from either side led to calmer price action into the stock market open. Both the S&P 500 futures and the Nasdaq futures were trading slightly negative when the opening bell rang.

Early on the Nasdaq and the S&P 500 traded sideways as price action carried over from the pre-market session into the cash open.

The overall non-directional, choppy action can be contributed to the annual Federal Reserve (Fed) symposium in Jackson Hole, Wyo., to close the week. Fed Chairman Jerome Powell is set to deliver a speech at 9 a.m. Central on Friday.

Stock market price action always moving

The market can be non-decisive leading into major Fed events like the Jackson Hole meeting. 

Still, there is always price action in the stock market.

The first move of the day came from the bulls when they were able to find their feet and move the market in the early hours of the session. This buying pressure was not overly strong or overwhelming, simply a steady effort by the bulls. This was expected price action with a catalyst (Fed event) looming. 

At the peak of the day, once the highs were set on the session, there was once again chop. At this time the consolidation occurred at the daily “mean,” or the 21-day exponential moving average. This was the third time testing the key level and once again, it stalled out. After spending some time at this level, the bears ultimately won the battle to bring  the market back lower.

Both the Nasdaq and S&P 500 started moving lower together. One key level that traders in our live-trading online chat room was targeting was the point of control (POC). This is a level that indicates liquidity on a stock chart. There are typically more choppy, non-directional moves on or around this level.

For the next couple of hours, there was the much expected chop at POC. This time period was very non-directional and low volume as the bulls and the bears had no real progress made from either side.

More factors affect market chop

Another factor contributing to this non-directional price action was the volume weighted average price (VWAP).

In the last hour of the day the bulls finally gained enough strength to move the market in their direction.

Where did price action go? As expected, to the 21-day exponential moving average.

At this point the pinball price action between the mean and POC solidified as key levels on both sides of the chart for both the bulls and the bears. 

Then, just like the previous three visits to the mean, there was once again a rejection. This price action can be persistent with an event like Jackson Hole coming in the following days.

Another factor looming through the day was the earnings report for Nvidia (NVDA) after the bell. This report is significant because NVDA is a major name for the semiconductor sector.

NVDA reported less than expected revenues in its earnings report, and traded lower in after hours price action. How NVDA might affect the market will be important to watch at the opening bell tomorrow.

At the close today, both the Nasdaq and the S&P 500 futures were positive on the session. The S&P 500 futures closed up .41%, gaining 16.5 points, while the Nasdaq futures closed up .42%, adding 53 points.

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