After some mild "sell the news" action on Monday and a weak close the bears were gearing up for some downside follow-through. However, Fed Chair Jerome Powell's testimony Tuesday morning before the Senate Banking Committee makes it difficult.
Powell didn't have anything very new or noteworthy to say in his prepared remarks. The Fed remains data dependent, they are watching global economic and financial developments, inflation is muted and there are some slight signs of economic slowing. While all this was well known, the market always likes to be reassured by a dovish Fed.
Breadth is running just slightly negative and the number of new 12-month lows has shrunk to under 100 again. There are still a few pockets of momentum, including my recent favorites, Nio, Inc. (NIO) and Pyxus International (PYX) , and a few retail related names such as Etsy (ETSY) and Dillard's (DDS) , but it is pretty narrow overall.
The bears are very anxious to press as they have had so little success lately. Even the bulls are hoping for some weakness that will allow them to play catch-up with the indices but they are easy short-squeeze fuel.
I'm not doing too much as I consider the action. I don't see too many new setups and I want to make sure I protect recent gains. If the indices test the early lows I may try an index short but I want to see some weakness first.