Jump Around

With a week to go before the annual central banking conference in Jackson Hole, Wyoming, gets underway from August 22-24, markets are jumping higher off strong retail sales this morning. 

Since the beginning of last week's sizable gap down we have seen all minor potential resistance areas prove futile, as bulls reverted to the old playbook of assuming any and all dips are buys and red flags or headwinds, such as the Yen carry trade unwind, were vastly overblown by bears. 

That said, the Nasdaq is violently gapping up to its 50-day moving average, seen below on the QQQ ETF daily chart (dark blue line, right arrow), aligning with or near the August 1st intraday highs before a nasty reversal happened back then.

Hence, it is fair to say that this price zone is a more serious potential resistance area than the previous once over the last two weeks. And I am still looking for this rally to slow down and roll back over. 

In addition, although Jackson Hole is not an official FOMC, we know Powell has made it his hallmark to be as transparent as any Fed Chair in history. With this in mind, I expect him to tip his hand about whether a rate cut is coming in September or not, especially since by the time he makes his Jackson Hole speech the Democrat National Convention will have concluded, leaving him with a bit of an opening to avoid looking like he is making the rate cuts political. 

In addition, the SOX is up 5% today which, in light of the price swings the semis have seen since July, drives home the notion that the market is incredibly indecisive how to value these stocks properly--They have enjoyed nonstop multi-year/multi-decade (in some cases) melt-ups but the macro picture for them is clearly turning murky just as the leaders had already been, essentially, priced for perfection. So, semis are up nicely today but still below the July 31st highs, for example, all headed into NVDA earnings at the end of the month.