(Free) 5 Fed Speakers on Tap Today

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Our View

There was a great piece from MarketWatch that laid out this week’s situation. There is another headwind for the S&P 500 this week that BTIG’s chief market technician Jonathan Krinsky and others are watching — May options expiration.

VIX expiration is set for Wednesday and S&P 500 options are set for Friday. In each of the last six years, and 11 of the last 14, Krinsky noted that the S&P has been negative during this week, with an average loss of 1.3%.

Michael Kramer, founder of Mott Capital Management, also weighed in, blaming some of the market churn on the run-up to those expirations.

“Generally, these option expirations have kept the market range bound; currently, support for the S&P 500 is at 4,100 and resistance around the 4,150 level. This week’s focus will be on the bulls’ attempt to surpass the 4,150 mark for the S&P 500, while the bears are eager to bring it below 4,100,” he said.

Kramer notes the stock market has consistently seen activity surges between 1:30 and 2 pm ET, and since jobs data earlier this month, there’s been a “notable” rise in demand that has led to afternoon rallies for the S&P 500.

The action has been “indicating a buy-at-any-cost mentality,” he said, arguing that it looks mechanical. He added that options-related flows and hedging activity are probably an influence here. It’s also where the 0DTE influence likely plays a role too. After the May expiration, many of those observations may very well vanish.

“Additionally, we know that the options market has placed the call wall at 4,200 for some time, and that is the options market’s way of saying it isn’t bullish on the market above 4,200 either,” added Kramer.

However, he did note that volatility could jump ahead of Fed Chair Jerome Powell’s comments on Friday.

It’s worth noting that there are several appearances from Fed speakers this week, with five on deck today. Lastly, Paul Tudor Jones said on Monday that he thinks the Fed is done raising rates.

Our Lean — Danny’s Trading Plan for Tuesday

MiM and Daily Recap

The ES traded up to 4156.25 on Globex and opened Monday's regular session at 4143. After the open, the ES made an early high at 4144, dropped down to the 4123 at 10:19, rallied just above the VWAP at 10:56 then traded in the 4142.00 to 4143.50 level and back-and-filled until 1:11 when the ES rallied up to the 4155.25 level at 1:12. After the high, the ES pulled back down to the 4136.50 level and then rallied up to 4149 at 3:02 and continued to stutter-step higher.

The ES traded 4147 as the 3:50 cash imbalance showed $245 million to sell and traded 4151.50 on the 4:00 futures close. After 4:00, the ES remained in a tight range and settled at 4148.75 on the 5:00 futures close, up 10.75 points or +0.25% on the day.

In the end, it was what it has been: a slow start to the week. In terms of the ES’s overall tone, it was firm. In terms of the ES's overall trade, volume was low at 1.14 million contracts traded.

Technical Edge

• NYSE Breadth: 74% Upside Volume

• Advance/Decline: 66% Advance

• VIX: ~$17.50

We have 14 Fed speakers on the schedule this week and five of them will be today. So beware of any intraday headlines that jar the tape.

We hit a couple of price targets in our individual names, which lets us “get smaller” and creates less stress in managing our open positions. Despite the tightening ranges, we’ve had a nice ~6 week sequence with these names.

Notes: DXY. Keep an eye on that $102.40 level laid out from Monday.

S&P 500 — ES

The upside has been capped by ~4175 (and more recently, but 4160-65). The downside limited to ~4115. We need a break of one of these areas to push the outer edges of the range. Even more recently, notice how the ES has pushed higher or lower, then retreated back 4140 to 4150 area by the close.

• Upside Levels: 4170-75, 4198-4206, 4242

• Downside levels: 4110-15, 4100, 4075-80, 4063

SPY

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.

Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B

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Go-To Watchlist

Feel free to build your own trades off these relative strength leaders

Relative strength leaders →

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6. [premium only] — guess it’s back on the list. New 52-week highs.

Relative weakness leaders →

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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!