As a trader, it's never fun to see the market spin its wheels from one day to the next. Still, that's precisely what occurred between the close of the Tuesday and Wednesday regular sessions. The iShares Russell 2000 ETF (IWM) closed down a few dimes but remained above its 5-day exponential moving average (EMA). The Invesco QQQ Trust (QQQ) , while dipping around 0.5% and closing beneath its 5-day EMA, is still comfortably above the more critical 21-day EMA. And the SPDR S&P 500 (SPY) , well, that's a hot mess of chop, trapped in a $10 range between $390 and $400.
While I would love to report that something transpired in one of the indexes to push toward a more aggressively bullish or bearish posture, that's just not the case. We are stuck navigating a choppy market that's waiting on something to tip the scales in a direction. This Friday's Personal Consumption Expenditures (PCE) price data may provide traders with a short-term direction, but I'm not holding my breath. Because investors are more concerned with a potential recession than continued inflation, we may see a greater emphasis on the monthly employment data than reports such as the Consumer Price Index or PCE.
Let's move away from the index ETFs and talk about the iShares 20+ Year Treasury Bond ETF (TLT) . If you're trading TLT, you should keep an eye on how price reacts if it breaks Tuesday's $104.02 intraday low or trades back above $105.
Chart Source: Bloomberg
The two blue moving averages on the chart above represented the TLT's volume-weighted average price anchored to the early March low and the mid-month intraday high. My take on this chart is straightforward. If bids run dry beneath $104, the path of least resistance is back to $99.50. On the flip side, if buyers support TLT above $105, which represents the approximate area of the VWAP anchored to the early March swing low, I believe there's a reasonable chance price will push above $106 (anchored VWAP from the mid-month swing high) and takes another crack at $109.50.
With the 14-period Relative Strength Index (RSI) holding above 50, I'm inclined to give the bulls the benefit of the doubt and roll the dice on a break above $105 and $106. Then again, I'm biased because I'm already long TLT in a long-term account.
