To The Moon

🚨 News Update: Major indices are higher following a better-than-expected initial jobless claims report and as investors digest Wednesday's 25 basis point rate hike amid recent volatility in the financial and banking sector. Fed Chair Powell highlighted his hesitancy of continued aggressive policy tightening while remaining focused on lowering inflation, signaling monetary policy easing in 2024.

After a small bounce, the market nose-divided in late trading as Treasury Secretary Janet Yellen said the federal agency was not considering system-wide deposit insurance. The market witnessed a broad-based sell-off, with the weakness more acute in the financials, real estate, energy and consumer discretionary sectors.

However, she calmed the market on Thursday that regulators are prepared to take additional steps to protect customer bank deposits if necessary. She also clarified on Thursday that Treasury officials had not examined the possibility of expanding federal insurance temporarily to all U.S. bank deposits without congressional approval.

This seemed to have buoyed the market, with the S&P 500 ETF Trust (NYSE:SPY) and the Financial Select Sector SPDR Fund (NYSE:XLF) both sharply jumping higher following Yellen's remarks. Shares of First Republic Bank (NYSE:FRC) mostly didn't react to Yellen's comments, opposite of a day earlier, when shares moved to the downside following her comments.

Still, Yellen's assurance that regulators are prepared to take additional steps if necessary should provide some comfort to customers who are concerned about the safety of their bank deposits.

🚨 Price Action: The SPY has been trading in an uptrend within a rising channel pattern since March 13, making a consistent series of higher highs and higher lows. The ETF’s most recent higher high was formed on Wednesday at $402.49 and the most recent higher low was printed at the $392.07 mark on the same day.

The rising channel pattern is considered bullish until a stock or ETF breaks down from the lower trendline of the pattern on higher-than-average volume. If that happens, in can indicate a longer-term reversal to the downside is in the cards.

On Thursday, the SPY was also printing an inside bar pattern temporarily (See post: 3/23 - Can we see another inside bar after FOMC day?), with all of the price action taking place within Wednesday’s trading range. The pattern leans bullish in this case but traders and investors can watch for the SPY to break up or down from Wednesday’s bar on higher-than-average volume later on Thursday or over the next few days, to gauge future direction.

⚠️ If you're keen to know how to trade using the VWAP indicator on Friday, you can refer to my post on 3/22 - How to trade using the VWAP indicator.

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