Bears Can't Block Buyers Ahead of Fed Testimony –

The market trended upward all Tuesday and the buying accelerated in the last few minutes of trading, following a gap-down open. Some nervousness remained about a slowing economy and how dovish the Fed might be, but when the bears failed to produce downside follow-through, the buyers slowly inched back in.

Market players seem optimistic that Fed Chair Jerome Powell is not going to say anything to Congress on Wednesday to upset them. While Powell may not guarantee rate cuts, he is definitely not going to rule them out, either.

It turned into a good day for stock pickers, as money rotated out of the Dow Jones industrial average and into the Nasdaq and technology stocks. Breadth was more than 2 to 1 negative most of the day, but improved to around 3,400 gainers to 3,800 decliners by the close. FAANG stocks lead the action, which is always good for stirring up some speculative interest.

Technically nothing much has changed for a few days now. The indexes are treading water as they wait for earnings season to begin. Earnings season is always important, but it takes on a little additional importance this time, as it will help to confirm or deny the narratives that the bulls and bears are working to develop. The bears are expecting to see evidence that trade wars and a weak economy are problems, while the bulls are looking for the market to shrug off those issues as it counts on a dovish Fed.

Tomorrow we’ll see what sort of reaction the market gives Jerome Powell, but we’ll probably have to wait for earnings reports before there is much trending action.

Have a good evening. I’ll see you tomorrow.

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