The Bearish Engulfing Pattern

THE WEEK

Most informed traders knew that The FOMC chairman, Jerome Powell, had a major speech on Friday at 10am Eastern.  Trading was on the light side until Thursday when there was a major sell off and the Market formed  a bearish engulfing candle pattern which usually indicates the Market Price/Action will be going down. I thought the sell off was caused by fear of traders thinking Powell’s speech would cause the start of a downturn.  I told my followers I was hanging in there as I believed Powell would be hinting at the start of interest reductions, the first in many years of fighting inflation.  This is Friday’s SPY chart by the minute.  You can see traders reacting positively and buying in as Powell spoke.

The Accumulation/Distribution for the Market is still at an E.  What this means is much of the big money from industrial traders is out of the Market right now.  As money comes back into the Market expect more of an up trending pattern. 

LOOKING AHEAD

There is only one economic release I believe could affect Market prices.  On Friday before the Market opens the PCE (Personal Consumption Expenditure) figures are release.  They will cause some ripple in the Market but I don’t feel it will have a long lasting effect.

The big news of the week is NVDA (Nvidia Corp)  Earnings Announcement is on Wednesday August 28, 2024 after the Market closes.  NVDA had the largest ever stock split on June 10th, 50:1 and is one of the highest traded stocks.  They average over 300 million shares traded every day.  

HOW AM I DOING?

I had a small gain this week as the Market went sideways holding its breath for Powell’s speech on Friday.  I had decided not to adjust my trades believing the trading herd would react positively.  They did to the speech but the day before the announcement The Market went down hard pushing some of my short trades into the money. I had to make adjustments because I didn’t want to have stock PUT TO me.  Prices came right back up the next day.

Big thanks to Tammy Barrett for sharing her Totally Synthetic Trade on the TQQQ’s on last Thursday’s webinar.

On Thursday’s Webinar.  

I will be setting up Credit Diagonal Spreads.  I see a lot of those sets right now.  

We will also look at the trading herd’s reaction to the NVDA Earnings Announcement.

To find the ideal look for placing Money Presses (Credit Diagonal Spreads)