GOOGL, MSFT Miss But Rally Anyway

Is that a clue?

Technical Edge — 

• NYSE Breadth: 29% Upside Volume

• NASDAQ Breadth: 35% Upside Volume 

• VIX: ~$24.50

I did not think the markets were going to respond well to Walmart’s warning, but we are seeing some interesting price action now that the S&P has been hit so hard. 

Last time Walmart startled investors in May, the stock fell roughly 20% in a three-day span. That’s very un-Walmart like as long-term investors in this name can vouch. Of course, it also came alongside disappointing results from Target, which triggered a wave of inflation/recession fear from investors. 

This time we’re seeing a different reaction. The S&P is not plunging lower alongside Walmart. That’s even after MSFT and GOOGL reported a top- and bottom-line miss. Both stocks are higher this morning, along with the futures. 

Does that mean the low is in? No! But you can’t deny that we’re seeing a change in tune. Now…onto the Fed. 

Game Plan: S&P 500, SPY, Nasdaq, CNC

Today’s the Fed. Traders need to remember that the market tends to get very choppy after the first hour of trading as we await the 2pm announcement. From there, it’s an algo’s paradise as the machines run the stops in both directions. 

S&P 500 — ES 

Tuesday resulted in an inside-and-down rotation, which put our key 3920 area to the test. This level was cracked but not broken, as the ES made a low around 3913 but closed at 3923. 

In effect, the 10-day, 50-day and daily VWAP measures held as support. 

If we get a daily-up rotation from here by clearing 3965, that could open the door back up to 4000. 

On the downside, a bearish reaction to the Fed could put the 3870 zone in play — the 21-day and the 50% retrace of the current range. 

A Trade on the S&P 500 Futures