Can We Rally Around the Fed? Yes.

The question is, "when?"

Technical Edge — 

• NYSE Breadth: 56.8% Upside Volume

  • Back-to-Back weeks of 80%+ downside volume 

• NASDAQ Breadth: 71.2% Upside Volume 

• VIX: ~$32.50

“Can we gap-down and bounce?” 

That was our approach to the market yesterday and it’s ultimately what we got. The market gave us a quick bounce after breaking the prior 2022 low and resumed its move lower until later in the afternoon when it rallied again. 

The question I now have is, “can we bounce post-Fed” knowing that the 50 bps rate hike has been well-telegraphed. 

I do feel like we can rally around the Fed, the question is when.

Game Plan — S&P (ES and SPY), Nasdaq (NQ and QQQ), Bonds, Individual Stocks

• I do not typically like individual stock trades with the VIX above $30. However, a few stocks warrant an extra look even though prior relative strength stocks seem to be rotating lower (making us wonder if we’re about to see a rotation into tech and a subsequent bounce). Either way, check out these names, and if you like the setups, consider a smaller trade size than usual. 

S&P 500

In yesterday’s session, we broke last week’s low at ~4119 and the 2022 low at ~4101, but then reclaimed both. 

In Globex, we took out Monday’s high at 4166 but are dropping back below it in the premarket. From here, the action is tricky with the Fed on tap tomorrow. Do we rally into the event? Stall? Selloff? 

I don’t know. What I do know is…