(Free) Two-Day Fed Meeting Begins. Time to Throttle Back a Bit

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Our View

The ES made a quick push above 4200 and the April high yesterday, then faded later in the day. Breadth was mild (at best) and the bulls just didn’t have it in them to finish strong.

There is likely a lack of commitment at play here too. AMD reports earnings on Tuesday after the close — and could hold sway over the semiconductor space, which has helped lead the market rally — then Apple reports on Thursday.

Remember, Apple is 1 of 7 stocks leading the charge higher, with the group garnering almost 90% of the S&P’s current rally.

There’s also the Fed’s rate decision and press conference on Wednesday. The market is currently pricing in a more than 90% likelihood the Fed raises rates by 25 basis points later this week, but it will be more about what the Fed has to say about rates going forward that the market will care about.

Our Lean

MiM and Daily Recap

The ES traded up to 4196 on Globex and opened Monday's regular session at 4183.25. After the open, the ES sold off down to 4181.50 and rallied up to 4197.25 at 9:43, back-and-filled around the VWAP at 4191, rallied up to 4199.25 and then dropped down to 4185.50 at 11:26. After the drop, the ES rallied up to 4206.25 at 12:41 and pulled back down to the 4196.50 level and back-and-filled for the next 45 minutes before the ES traded down to 4184 at 2:38. From there, it rallied up to 4192 at 3:03 as the early imbalance showed $495 million to buy.

The ES traded 4189 at 3:50 as the MIM showed over $1 billion for sale, hit a high of 4190.75, then faded and traded 4184.75 on the 4:00 cash close. After 4:00 the ES traded up to 4190.75, sold off down to 4178.75 and settled at 4179.50, down 9 points or -0.21% on the day.

In the end, the ES rallied off of very low volume, then lacked buyers to keep it up into the close. In terms of the ES’s overall tone, it was very much a two-way trade. In terms of the ES's overall trade, volume was low at 1.19 million contracts traded. Bitcoin got pounded, oil closed down 1.34% and wheat made new lows (while having record short open interest).

Technical Edge —

• NYSE Breadth: 44% Upside Volume

• Advance/Decline: 40% Advance

• VIX: ~$16.50

We’ve just had our best individual stock run of the year, so with the Fed meeting starting today, Apple on Thursday and the jobs report on Friday, I’m pumping the brakes a bit here and just focusing on the indices (although 1 stock sticks out, below).

Keep it light and stay sized right. We’re at an interesting juncture here as May starts off on tricky footing.

S&P 500 — ES

~4200 held as upside resistance as the ES now sits on the 10-ema on the 4-hour chart.

• Upside Levels: 4200-06, 4242

• Downside levels: 4150, 4135-4140, 4120, 4095-4100

SPY

The bears aren’t ready to call it quits on the $415 to $416 resistance area just yet…

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

1. BRK.B — long from $319-ish — trimmed $325 to $325.25+, then $327+ and finally down to runners or out at $330+ — Wow, what a sequence!

2. MCD — Long from $291.50 — trimmed ⅓ at $292.50+, down to ½ or less at $295+ and Down to runners at $297.50+ — Another congrats to longs

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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!