Navigating Fed Day. CVS Takes a Dive

Remember how they like to run the stops today

Technical Edge 

• NYSE Breadth: 82% Upside Volume

• Advance/Decline: 70% Advance

• VIX: ~$14.50

As most long-term readers know, we tend to search for relative strength stocks to buy rather than relative weakness stocks to sell. That said, we have one open short position on the books in CVS. 

Those holding that position, please see our update in the section below. Otherwise, I am glad we can pare down a bit into a potentially volatile situation and are not carrying a lot of open positions.

S&P 500 — ES (September Contracts)

The ES gave us a push to a major level yesterday…4420-25. That’s the 261.8% extension of the current range and the 61.8% retracement of the bear market decline. 

It can go higher, but a rest would be more ideal. Be on watch for a move into session highs or lows going into the Fed presser — the algos love to run the stops on both sides and put the market at extremes before creating sharp reversals. 

• Upside Levels: 4420-25 (bingo), 4449

• Downside levels: 4400-05, 4370, 4345-50

SPY

Don’t forget yesterday’s open gap down at $433.88.