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Good morning traders, what an exciting day we have ahead of us. Yesterday we had earnings from Microsoft, Google, Visa and a host of others. We have to talk about those earnings and how they will play in today’s price action. Microsoft had an estimated Earnings of $2.544 and beat with $2.69 actual earnings, and still dropped almost $13 after hours. Microsoft’s power order is weekly then hourly so today I am looking for Microsoft to take out the 336 level today then rebound back towards the 345 area or better. Google had earnings expectations of $1.31 and beat with $1.44, which gave them a $10 rally after hours. I expect google to test the $134 area before cooling off for the day. The next stock I want to bring up is Meta, it didn’t have earnings yesterday but will report after hours today. I am looking for Meta to consolidate for a while today before heading towards the 314 –321 area at some point this week. The reason why it was important to map these stocks out for the day is because they will be responsible for pushing the index today along with Nvidia. Mapping these stocks out gives me a better idea of where the entire index will likely head today. I am looking for the Spy (S&P 500) to test some lows early in the day before consolidating a bit and changing direction. There is not much need to talk about the actual announcement because everyone has already priced in a 25-basis point rate hike.
Key levels to watch for … Resistance (jack) 455 (queen) 456-457 and (king) 458-462 area. Support (jack) 454 (queen)453-451 and (King)450-448. The main thesis for the day is a BEARISH bias closing Below 455.44 with a projected target/low of between 454-448. Alt thesis is BULLISH bias closing above 455.44 with a projected target/high of between 455-462. The main channel we are in is between 453-471, that’s a lot of room to roam during a FOMC week. Yesterday, market strength and breadth opened at lows of the day and rallied most of the morning and leveled out around midday. I expect strength to be similar to yesterday start near lows and maybe test lower early in the session but start to show a divergence (strength building as price continues lower) setting up a big pop during the FOMC Announcement. We have somewhat harmony between the technical side which is (Bearish) and the Quant side (bearish bias). The futures have a bearish bias for the day with somewhat harmony between the technical side (Bearish) and the Quant side (bearish) The reason I say somewhat harmony is because on the technical side we are close to the epicenter which is around 453 on spy. Being there is like starting at 50/50 bias and there is a chance that we get there premarket. Scenarios for the day:
- 1) Rounded reversal day type structure. We could get a continued push lower toward jack or queen support area and have a later midday chop taking us into the FOMC before Getting a violent head fake down up then continuing back up with the same energy or force we went down with the first part of the day or vice versa. 37% probability
- 2) Trend day Down we open gap down and start with a push back toward the previous close. We find resistance on or before the previous close then begin the downtrend for the day. We usually find midday chop around either possible queen or king support area. Then the second half of the day we start flat to sideways going into the FOMC meet where we will get our violent head fake down up center then continue up. Be aware of a failed trend day that where we hit our target and reverse or vice versa 35% probability
- 3) Expanded Range Day structure. We could see some spikes down followed by smaller minor rallies going into a sideways consolidation around 1pm until the FOMC Announcement starts. Giving us a head fake up then down then leveling out and continuing down from there Vise versa 28% probability