Two "Thought Camps" Heading Into Powell's Speech

ES-- In my final update yesterday, I made a snarky comment that the index teased us by recovering impressively off of the intraday low, and by closing above the 20 DMA, but it was likely a teaser ahead of Friday's speech from Fed Chair Powell.

This AM, ES is trading at 6389, backing away from yesterday's close at 6413.25, which places it again beneath the 20 DMA (6408), but still above yesterday's intraday low at 6362.7 in what should be a very subdued, nervous session ahead of tomorrow's Jackson Hole "reveal."

From my reading, I sense there are two "thought camps" heading into Powell's speech:

1) Powell will remain stubborn and data-dependent, as well as "Fed independent" in principle, holding the line against POTUS bullying...

2) Powell is perceived to be relatively hawkish, but will make a nod, perhaps a gratuitous nod, to a September rate cut of 25 bps provided any upcoming data remains well-behaved... 

Apart from attempting to game the reaction to his speech, which is probably a fruitless task, the technical setup is warning us that a sustained breach of the June-August up trendline (see my attached Daily Chart) on a break of yesterday's low at 6362.75 will leave ES vulnerable to downside continuation to test the up-sloping 50 DMA, now at 6300, which implies a 1.4% decline from the current price at 6389.75...

Conversely, as long as yesterday's low contains any forthcoming weakness, the key technical level remains the location of the 20 DMA at 6408 (or wherever it is during today's session). The ability of the index to close above the 20 DMA is a technically positive "event" that avoids triggering an otherwise negative signal ahead of whatever Powell has to say tomorrow morning... Last is 6389... (SPY continued below my ES chart)...

As we might expect, SPY is playing defense this AM too. My attached 4-hour chart shows the SPX ETF down about 0.4% at 635.60, but above yesterday's low at 632.95, which must be preserved to avert downside continuation toward a confrontation with key support from 618 to 623. 

To regain upside traction, SPY needs to climb and sustain above 640.00... Last is 635.55...