The Powell & Mnuchin testimony seems indeed had a rather limited downside price effect on the S&P 500 - but managed to bring down high yield corporate bonds some more.

On one hand, we have the ongoing non-confirmation of credit markets and complacent put/call ratio (too few puts), on the other, there is the improving post-testimony performance in energy, materials and industrials, and general sentiment in stocks still bearish (good from a contrarian point of view). Even the defensives (utilities, consumer staples) are showing some signs of life - but encouragingly less the riskier counterparts, as seen in the ratios (XLF:XLU, XLY:XLP).

Then, the Russell 2000 is almost at its mid-June peaks while the S&P 500 isn't - that's also leaning bullish after yesterday's one-day show of strength.

In short, the testimony effects are turning into a non-event, making it justified to close at market the currently open short position and simultaneously enter on the long side.

Please see the Trading position section for details.

Trading position (short-term; futures; our opinion): long positions (100% position size) (opened at market, which is 3067 currently) with stop-loss at 2570 and the initial upside target at 3160.

Thank you.

Monica Kingsley
Stock Trading StrategistSunshine Profits: Analysis. Care. Profits.