Fed Chair Warsh Shock! Inflation Spreads As Tech Reverses

Hello everybody. Welcome to Trading the
Close. My name is Drew Dossey and guys
we had a big day today. No more Jerome
Powell giving the FOMC news conference.
Instead we got Kevin Warsh and Kevin
Warsh he had a pretty nice approach. He
was pretty calm in his demeanor.
However, he was a little bit hawkish in
his tone and what this meeting did to
the markets was really fascinating. We
had a major sell towards the end of the
day closing out the markets pushing
prices down lower on the charts and then
we also had something else develop. The
CME predictable
Fed rate hike tool actually increased
guys. Before the meeting we were looking
at hiking rates in December. Now we're
talking about hiking rates in October
and that's because
it's becoming a little bit more sticky.
Now we wasn't over spread. However, it
was basically in the housing market into
food services, recreation services,
super core services. So basically almost
everything. However, he did not specify
it spreading everywhere but basically he
kind of said the same thing too. So the
10-year yield spike, the dollar spike,
gold fell as well as silver fell,
Bitcoin fell, everything fell. So let's
get into the charts and take a look at
what's happening here today. So we see
the spiders had a pretty decent sell
today down 1.25%
but let's get into the 10-minute chart
so we can see really where that
happened. Let me take off extended
trading hours so you can see that. All
right, so here we go. We start the day
over here in this range
and then we just really chopped
sideways. Then comes the meeting
at 2:00. Look at that sharp sell down
all the way to $743
and then we popped right back up. This
usually happens during the FOMC.
Generally, the first move is the wrong
move, and I was waiting for Kevin Warsh
to come out and really save the markets
right here at 2:30 when he took the helm
at the podium. And we did do it for two
10-minute candles, but then look at the
following sell that occurred nearly
straight down to close the day down here
at the lows. So, where does that bring
us on the chart? Just above this key
threshold getting us into the more
near-term bearish price action in which
we only had 2 days down here, one brief
half day here, but then 2 days
underneath this trend line. We'll see
tomorrow if we breach this level. That
level is at $739.02.
Be mindful of that as that could then
open up more selling pressure pulling us
down to the next level of support at
$727.73.
Into the Nasdaq down also today down
decently 1.34%.
Didn't quite fill this gap fill here
from price action last week on Friday,
June 12th. However, remained above it.
We'll see very well tomorrow. That is a
very minor level of support at that gap
fill, 25,891
points. If that gets breached, much like
the Qs, the next destination is going to
be the top of this parallel channel. And
I remind you, too, every time we hit uh
whether that's a support level or
resistance level to the upside. Every
time we hit this, it weakens the levels,
all right? And so, another approach,
specifically another approach of this
level with the very short time frame,
would allow this to weaken even more.
However, it's still minor support. It's
proved to be so in the past. So, that's
what we're going to expect to see, but
we're going to expect to see potentially
sideways chop on this level if price
does come down into it in the near term.
Now, guys, this is the one I want you to
follow, the SMH. I've talked about this
for many times. We've really been
driving this home with this inclining
trend line. This is what I'm really
keeping my finger on the pulse on the
markets is with the SMH. If we start
breaking this inclining trend line, then
that could spell some trouble for the
high-flying tech names much like Micron,
SNDK,
Seagate. All of these that have really
been ripping off the charts making
historical records pushing high in the
S&P 500. We may be seeing a slight crack
of the ice with that if we get some
closes and extended moves underneath
this inclining trend line. Now, today we
closed underneath it again. So,
yesterday we closed underneath it and
then today we closed underneath it. You
look at the 10-minute chart, you can see
clearly we had those two days closing
underneath that inclining trend line.
After hours, we already see this dotted
blue line with the price on the semis
coming right back up. That's really been
the story in the markets. We were about
to break down here on June 5th and then
we just never confirmed the breakdown.
Look how many times price has interacted
with this inclining trend line. Much
like I said on the previous chart, every
one of these times weakens the level.
Yet, buyers are still coming out of the
woodwork to ensure the SMH does not
break down. Now, if we get a daily close
under this candle
that we closed at today, tomorrow, that
will at least start to have another box
checked for this ice finally breaking on
this monumental push up that we've been
experiencing since the end of March. So,
watch very closely tomorrow. Do we get a
close underneath this low, $623.13?
If so, that will start kick selling or
kicking off more selling pressure in the
SMH. Let me remind you, too, we still
have this weekly topping tail still
intact. The only way for this weekly
topping tail to get negated is for price
to close above it. And when does this
weekly candle close this week? Well, it
does on Thursday cuz Friday the markets
are closed for the June 10th holiday.
So, we've got one more day to see if we
can negate this weekly topping tail for
this week, otherwise it's into next
week. But mainly, again, follow this
trend line. That's going to help us
gauge whether or not that happens this
week, next week, or also the momentum of
the SMH. All right. Uh real briefly into
the IWM, we see here they also did have
a decent down day today, coming down,
not even touching the top of this
parallel channel, developing some wicks
from the top, looking like some selling
pressure is emerging in the IWM. Into
the 10-year yield we go very quickly. We
see here that price action today on the
10-year did get above this key trend
line that I have on the chart at 4.484%.
This is part of the reason the markets
were selling off. If I flip over to the
hourly time frame, you can see really
when the 10-year yield started to ignite
and blast off. It was right here at 2:00
when the FOMC minutes were released, and
then then it just continued through the
end of the day, pushing over that key
level, as I mentioned before, that could
uh be staging for another move higher to
this declining trend line for the next
level of resistance at 4.554%.
Keep in mind, October, we are at least
now percentage-wise slated for a rate
hike. That could change with any future
development with inflation data as well
as labor data. So, we'll be playing
paying close attention to that in the
coming weeks and months.
All right. Into gold that we go. Gold
and silver both saw some selling
pressure today. You know why? This
always happens, guys, every single FOMC.
When the dollar starts pushing up on the
charts, it's going to put pressure on
both gold and silver. And here's the DXY
on the dollar. Look at that nice surge
that we have had today on the hourly
time frame. It all came after the FOMC.
The dollar wasn't doing much, and then
next thing you know, everything just
starts ripping up on that chart. And
then into gold, same thing happens,
starts declining with the rise of that
dollar. All right? So, that's just how
it works near term around the FOMC. Any
big spikes on the dollar, you're going
to see selling pressure on gold. Gold
still is doing okay now, not completely
broken down from this nice green candle
push up. It all is still staying within
this range. So, not too much new to
report there on gold. Very similar story
here on silver. Uh still trading right
about this candle range. It would be a
little bit better in the last 30 minutes
if we can have silver push up and close
within this low at $68.04
right on this green candle. If we can
close within that, that would bode a
little bit better near term uh for
upside movements on silver with that
upside resistance, this inclining trend
line 7341.
Uh near term support down here at 6102.
I'm still anticipating silver eventually
coming down here sub $55 around the $50
mark, in which I will start picking up
some more physical silver.
Into oil. A nice continued decline here
on oil. Looking like we're going to put
in the first daily close ever since back
over here on March 3rd underneath the
$75.56
support level. So, a very nice decline
as I've said, and we're actually gearing
up for some sort of near term technical
bounce on oil. Simply because look at
this, guys. On the daily RSI, we have
now finally crossed that threshold of
the is oversold near term
and could be due for a bounce. Doesn't
mean it's going to happen immediately.
Um as you can see, we're breaching the
support level. We very well could come
down and tag this trend line at 6983
we get that bounce, but it's basically
on the warning track getting ready for
some sort of sideways consolidation and
or upward movement to work out that
oversold situation on the RSI. Uh next
up into Nat Gas. Nat Gas, as we've
talked about, much like over on the SMH
chart, it has just really been trading
all amongst this inclining trend line
trying to do its best to hold this
trajectory and push up into this
inclining parallel channel. Today uh
switched narratives from yesterday
closing above, today we closed beneath.
That's just one day closing beneath,
keep in mind we did not confirm a
breakdown any one of these days. So,
we're very much in the similar situation
right here, need to have a confirming
move in which we would have to get
underneath today's lows and close down
there for a confirmed break of this
inclining trend line. So, we'll see if
that happens tomorrow. Uh next up into
Bitcoin, this is on the weekly chart,
however, Bitcoin fell about 2% today.
You can see on the daily time frame
starting to put a nice curl over. First
level of near term, and this is a minor
level of support, 62,987.
In essence, a pierce of that $63,000
level, you could see a very small near
term bounce up here just above $65,000.
Otherwise, if we break that, that uh
further um extends price down closer to
our head and shoulders target sub
$40,000, where Bitcoin I would certainly
be a buyer. I likely am going to start
buying Bitcoin once we get under $50,000
and just average in all the way down to
that head and shoulders target.
Guys, next up, I wanted to bring this
chart to your attention yesterday. Uh we
just had other charts to go through. We
had our BRB special or our bounce
retrace and uh our breakout uh retrace
and bounce play. Those plays are so
powerful. Matter of fact, today with
Hood, it just decided not to retrace and
just elevate up on the chart. But, these
uh uh candles that framed and printed
yesterday are worth going over even
today, and it really highlights what we
were experiencing during the FOMC this
afternoon. Candles and patterns and
charts often time foreshadow moves that
are about to happen. You may not know
the event, and you may not know what the
trigger's going to be, but patterns are
starting to show up into the charts
showing that we were likely due for more
selling pressure. However, the power of
of the semis and the power of the AI
data center build out. Now, this was
Seagate is a memory play, okay? We put
in a daily topping tail yesterday. Look
at the strength of this candle here
today to keep up in the top range of
this daily topping tail. Now, we didn't
breach it, nor did we close above it.
Now, keep in mind, a daily topping tail
certainly does imply a near-term
downward pressure on a chart. However,
we have negated several daily topping
tails to get where we're at, so they can
easily be negated just as just as the
same. However, it's a key data point to
recognize and illustrates how much
momentum is still contained within a
certain sector or in this case on this
chart of STX. Now, this is still in in
play. And the only way this daily
topping tail is not in play is for us to
put in a daily close above $1,097.
Until then, I'll be looking to the
downside for STX. First level of
support, 1,011,
followed by the bottom of this parallel
channel, which coincides with the gap
fill here around $931
on the chart. Next up, another huge
daily topping tail, WDC.
But much like STX, look at the rallying
power behind WDC after hours, even
pushing price up near the top of this
topping tail. The thing that still
remains is this power of the topping
tail. That can be negated tomorrow with
a close above $729.92.
So, this is on the radar. Again, it
doesn't mean we're going to start
cracking and falling, but these small
signs are emerging. SMH trading right on
that inclining trend line. We're getting
topping tails on both STX and WDC. And
then lastly, one of the big
behemoths in the markets now, one of the
top seven in the Nasdaq composite as far
as market cap is MU. Now, this yesterday
was not a topping tail, but this was
something equally as powerful as a
negative print on the chart. This is an
engulfing reversal candle. You can see
price action open yesterday above the
highs of Monday's candle, but then
completely reversed all of those gains
and closed underneath that daily candle.
That is not a good sign to see,
particularly at the top of a chart. That
tells me a lot of investors,
specifically yesterday, were jamming
that sell button and taking profit. Now,
notice both STX and WDC had price action
really right near the topping tail and
and approaching it after hours. MU is
not doing so. That does also illustrate
that this one big red candle really is
trying to change the narrative on the
charts. Of course, much like the topping
tail, we get above this and put in a
daily close above this candle, then this
all just kind of washes away like water
under a bridge, but still at least
there's cracks starting to emerge. And
then you go back further on this chart.
Here was a hanging man candle, also very
bearish, when we had the following day
with price action close underneath it.
And that's exactly what occurred. So, we
almost could be replicating what just
happened. And so, you can see here from
the top to the bottom, it was a nice 20
plus percent decline on MU. We very well
could be facing something very similar
if we do have a close tomorrow
underneath both today's and yesterday's
candles. You could see about 20% down
will take us near the low range of what
just happened here on the chart of MU,
bringing that down sub $870.
All right, guys. That wraps up trading
the close. Don't forget to like and
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help you guys learn patterns and charts,
learn technical analysis so you can be
successful making trades. Guys, we'll be
back here tomorrow. Can't wait to see
how the market digest this news. We've
got inflation that's going to be a
concern running through the summer and
potential rate hikes,
maybe encroaching before October. Can't
wait to see what that data gives us
tomorrow. Until then guys, have a
fantastic day and I'll see you guys on
the charts. Take care folks.
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