Algos Go Crazy on Powell Headlines. Now What?

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Our View

July was a good month, but I’ll be happy when it's over. So far for the month, the S&P 500 index (SPX) is up 116 points or 2.6% and the Nasdaq is up 336 or 2.45%. The Dowis up 1,112 points or 3.23%, while the Russell 2000 is up 4.85%.

While the S&P and Nasdaq haven’t exactly been a disappointment, it’s clear there’s been a rotation into the laggards — AKA, the Dow and the Russell.

After the futures sold off early yesterday, I had a feeling the markets were going to rally and I got out of my short ES positions. The machines did exactly what we noted in the “Technical Edge” section — they ran the edges of the range and reversed it.

We wrote: “We already know the 25 basis point increase will come at 2:00 pm. The real wildcard is Powell at 2:30. That’s when they love to run the edges of the range, knock out the stops, then reverse the tape.”