It was Supposed to Be a Non-Judgmental Fed Intervention!

After all of these years since The Fed stepped in as a more active market participant than at any point in its history, markets remain sensitive to any and all things uttered by Fed heads and, especially, new Fed Chairman, Jerome Powell.

Chair Powell is holding his ground early on, assuring markets that some volatility will not spook him from gradual rate hikes in the coming Fed meetings. 

Be that as it may, you can be sure that markets will hang on every subsequent word of Powell and indeed all Fed talking heads going forward, much more than they did before the financial crisis (which seems like an eternity ago at this point). Indeed, the Fed intervention during the 2008 crisis was seen by many as an emergency and necessary measure. But it sure took its sweet old time to unwind, in terms of the Fed backing off the newfound power they had come upon. 

With markets flattish as I write this, a key technical issue the rest of this week will be whether the major indices can hold back over their respective 50-day moving averages into pauses. If so, then a run back to new all-time highs is a colorable thesis.

We also want to watch the emerging, hot sector of 2018 closely for new long entries in a variety of stocks. Cybersecurity continues to be a prime example, especially with PANW gapping up after earnings last night. 

Overall, the Powell comments this week is something new to markets, as we largely knew what we were getting from Yellen previously. The good news is that we now have some well-defined lines in the sand below on all indices to gauge just how spooked (or not spooked) markets will become with a new punch bowl operator in town.