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Our View
Powell didn't say anything we didn't know already and the ES flunked because of it — bulls were looking for a soft pivot and they didn’t get it. After falling behind the 8-ball, the Fed is overshooting. There are more rate hikes coming in 2023 and the Nasdaq just fell apart as a result.
I know there are a lot of moving parts, but higher rates are a big problem for the Nasdaq. While there have been constant rotations, the ES isn't acting so badly. It is doing exactly what it's been doing for the last two weeks — chopping back and forth.
There are three scenarios for year-end:
The ES starts doing some back and fill next week and starts going up
The ES takes out support at 4000 and trades back down to the 3920 area
It just keeps doing what it's doing, running all the upside and downside sell stops and going nowhere in the process (did you know, the ES is flat over the past month?)
Our Lean — Danny’s Take
After a big move Tuesday, we opened Wednesday lower at 8:30 Chicago time (9:30 ET for you New York time-zoners) and we rallied 45 handles from the opening, and then we closed below the opening level of 4054.
Our Lean