2-Day Fed Meeting Starts Today

Apple Goes for a Breakout

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Our View

The Fed’s two-day meeting begins today, with a rate decision due up tomorrow afternoon at 2:00 p.m. ET, followed by a press conference 30 minutes later. I was talking with another old floor trader the other day and how they used to take off for the mornings of the Fed days.

They wanted to hear the announcement and then trade the action with as little bias as possible. In the current day of online trading, instantaneous news flow and of course, algorithmic trading, it’s a much different environment than 30 years ago.

In any regard, today is one big pre-Fed trading day and it could be a lot like yesterday’s action — a choppy, upside grind. This morning’s gap-up complicates matters a bit (but more on that in a minute).

Wall Street will look to put the “failing bank” rhetoric on the back burner for a day or two until we get the Fed out of the way. Lastly, it seems like 100 point ranges are back in style as are the Feds bailouts.

Our Lean

Coming into the session, it’d be much easier if we weren’t gapping notably higher on the day. As of 8:00 a.m. ET, the ES is up 36 handles (0.90%) and the NQ is up 92 (0.73%)…

This is the section where Danny lays out his Lean on the market and his approach to today’s trading session.

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Danny Riley is a 39-year veteran of the CME trading floor. He has run one of the largest S&P desks on the floor of the CME Group since 1985.

MiM and Daily Recap

The ES had a near 80-pt range in Globex, after an early rally up to 3978.25 and sold off down to 3897.25 and opened Monday's regular session at 3954.50. After the open the ES rallied up to 3966.25 and then pulled back to the 3955 level at 9:45, then made 5 separate higher highs up to 3889.50 at 11:15 and then dropped down to 3954 going into 12:00. After the pullback, the ES stutter-stepped up to lower high to 3986 at 1:15 and pulled back down to the 3966.75 at 2:40, rallied back up 3981.50 at 2:50 and then traded down to 3969.75 as the ealy imbalance flipped from $362 million to buy to $850 million to sell.

The ES traded 3984.50 as the 3:50 cash imbalance flipped again, showing $63 million to buy and rallied up to 3989. On the 4:00 cash close, the ES traded 3984.50 and settled at 3987.50 on the 5:00 futures close, up 40.50 points or 1.04% on the day.

In the end, the best trade was on Globex when the ES was up 30 points and dropped 80. In terms of the ES’s overall trade, it was a choppy upside grinder. In terms of the ES’s overall trade, volume was lower at 1.476 million contracts traded.

Technical Edge —

  • NYSE Breadth: 61% Upside Volume

  • Advance/Decline: 59% Advance

  • VIX: ~$22.75

When the Fed’s all said and done, which side is it going to deal a blow to?

Put another way, will the bulls suffer or will the bears — or could it be both? Despite a world of rising rates and failing banks, the S&P continues to hold in. That’s even after declining in 4 of the last 6 weeks.

This morning the index is breaking out over downtrend resistance and, at least for now, is rotating over last week’s high.

S&P 500 — ES

  • Downside levels: 4009 (last week’s high), 3990, 3975 & 3948-3958.

  • Upside Levels: 4020 to 4030, 4055, 4080.

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Open Positions

  • Bold are the trades with recent updates.

  • Italics show means the trade is closed.

  • Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)

  • ** = previous trade setup we are stalking.

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Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!