S&P 500 Down 7 of the Last 8
The Fed's on tap this week and it's traders' main focus.
Technical Edge
NYSE Breadth: 75% Downside Volume
NASDAQ Breadth: 71% Downside Volume
For the better part of a month, we have been talking about the potential for a selloff into the Fed event, then a rally once Powell & Co. announces a rate hike. A classic “sell the rumor, buy the news” trade — the opposite that we’ve seen play out over the years.
That said, I want to be careful with that narrative because the trend has clearly been lower. So I don’t want to build up any sort of certainty that we will rally post-Fed, because the reality is, we may not!
But “sell into the event, rally after the announcement” is one scenario I am watching closely.
Game Plan
Pre-Fed days can be choppy and frustrating and I plan to avoid that frustration for the most part. We’ve had 10 weeks to trade this slop so far this year. I think it’s okay to let it set up for a day or two as we work around the Fed.
Now we see commodity prices falling over, while tech continues to get buried. “The generals go down last in a bear market” is a common phrase and with Apple, Alphabet, oil, cybersecurity stocks and more starting to roll over — the leaders — maybe that’s what we’re starting to see.
S&P 500 — ES
Feel free to extrapolate this layout to the SPY.
This is why we go from level to level. Once the ES failed to get up through 4275, it put the 61.8% retracement near 4223 in play. Once it lost that mark, it opened the door to this month’s low, which is where we are in the Globex session now.
A further drop puts the February low in play near 4100. On a rebound, the ES needs to clear 4223 and the 10-day ema. Above these marks puts 4260 in play, then 4275.
Want to see ALL of the technical layouts?
Easy.
Just take a free trial — (There is nothing to lose).
Gain access with a free two weeks
Economic Outlook
