Equities continue higher despite Jay Powell’s hawkish rhetoric concerning the pace of interest rate rises.
His tone is reminiscent of Mario Draghi’s famous words of 2012 when he said the ECB would do “whatever it takes” to save the euro. Markets were relieved, the euro rose, and bond yields on benchmark bonds for Spain and Italy duly fell. A win-win.
However, looking at the daily SPDR® S&P 500 (NYSE:SPY) chart, Powell’s words have yet to leave their mark as the index continues higher albeit at a slower pace.
Moving to the weekly chart for the VIX. Here, the key level is 25—which has been breached as the price action sits below the volume point of control and is therefore bullish for stocks.
Finally, a look at the weekly chart for SPY. Price action is now above both the volume point of control and pierced the strong resistance at 445.
In summary, it will be an interesting end to this first quarter but, as always, it will be volume that validates the price action.