Wednesday is the big day, with the Fed statement and projections at 2 PM and the press conference at 2:30. Tuesday looked very much like a short-covering rally, with delta hedging very positive on the S&P 500, SPDR® S&P 500 (NYSE:SPY), and Invesco QQQ Trust (NASDAQ:QQQ) ETF. The VIX even moved below 30. So perhaps yesterday saw traders reducing short positions ahead of today's big event.
There was no other reason for Tuesday's rally. Asian markets have been a disaster of late, and European markets stalled out. So, the only logical explanation for the rally was a risk reduction ahead of Wednesday. Although a slight miss, the PPI print will do nothing to sway the Fed one way or the other. Additionally, yields finished the day flat. So don’t be too excited by yesterday's rally.
I am a little annoyed because my perfect-looking triangle in the SPY is now not so perfect-looking. But like I said on Monday on the move lower, we need confirmation, which held true for yesterday. So essentially, Tuesday's rally may mean nothing by Wednesday's close, and with a giant gap to fill at lower prices, a move lower back below is 4200 is possible.
NVIDIA
NVIDIA (NASDAQ:NVDA) rose by almost 8% yesterday, but you would never know it from looking at the chart. When you look at it, there was nothing worth talking about.
Amazon
Amazon.com (NASDAQ:AMZN) rose by almost 4% Tuesday too, but like NVIDIA, nothing had changed.
Shopify
Shopify (NYSE:SHOP) also rose by around 8% on the day, but what had changed here, besides nothing.
