The volatility we suggested would be trade war and G20 related came at us today from a completely unexpected direction. Fed-head Jerome Powell set up an epic bull trap in his speech to the Economic Club of New York. The market was up over 2% in a matter of hours as his speech included some vague inferences that the Fed's policy of gradually increasing interest rates was not as set in stone as he had previously stated. Stocks and gold spiked up, while the US Dollar fell off a cliff. All based on a few chosen words, and the market's interpretation thereof.
The crash-talkers and bears for-the-day have put their tails between their legs and scampering mostly out of sight. Some well known bears are already starting talking up ""underpriced values" in a complete turnaround of sentiment. Meanwhile there are still 23 days to expiration left in December puts and 51 days left in the January puts. All to be measured against one day of words from the Chairman of the Fed.
Like I said: Bull Trap.
This is an hourly chart DIA with Fibonacci retracement levels of the 20 point decline from Nov 8 - Nov 26, a time when the DJIA fell 1,000 points. Today's spike up has taken the Dow to its 50% of that entire decline. Somewhere between 50% and 61.8% should stop this rally, as those are typical Wave 2 reversal levels.