Weekly Wisdom: FOMO Bulls Await Fed Meeting

Greetings fellow traders and welcome to your January 26th edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Let's get to what we're currently seeing in these crazy markets and what we have our focus on going forward.

Taking a look back on this week, January 23 - 27:

• $SPX has been subject to a very volatile week, with events such as $MSFT earnings and the Bank of Canada’s monetary policy statement shaking the tree both ways on Wednesday.
• $MSFT provided a decent report but was hit back down hard on the conference call with the CEO highlighting dark stormy clouds ahead for tech for the next 2 years. This had markets lower on Wednesday with continued selling in the first hour of the day.
• This was followed on Wednesday morning by the Bank of Canada giving their rate decision at 10:00 a.m. EST with a follow-up press conference at 11:00 a.m.
• “If economic developments evolve broadly in line with the outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases,” the Bank of Canada said Wednesday.
• This was exciting for the doves out there as many think the U.S. Fed will soon follow suit, with Fed Futures still below 5% and actually pricing in a 20% chance of a pause in hikes at the March meeting. Either way, only 2 more 25 basis point hikes are priced in, despite Fed members consistently calling for rates to go to 5%+.
• $SPX had a huge recovery following the Wednesday morning selling, rallying from lows of 3949 to a high of 4019.
• Bulls are excited with the $SPX potentially closing over the big resistance trend line for the first time.

And here's what we are eyeing next week, January 30 - February 3:

• Bulls are fully in control after stepping up to the plate and keeping markets stable despite the $MSFT scare. Wednesday’s low of 3950 is important for bulls going forward. If you are long $SPY from the 386 breakout and raised your stop to the January 19 low of 387, feel free to raise those stops up to Wednesday's low of 393.50.
• $VVIX remains off year lows and needs to continue to be watched for clues either way. Bulls would love for $VVIX to come back down under 77, and that could help support the next $SPX move to 4100-4200. Should $VVIX be able to trade higher over 88, $SPX most likely has a solid breakdown back under 4000.
• On Tuesday, January 31 we’ll get Chicago PMI data at 9:45 a.m. EST, followed by the Conference Board's consumer confidence index at 10:00 a.m.??
• Wednesday, February 1 is a big day starting with the ADP private employment report for January at 8:15 .a.m EST. Then at 10:00 a.m. we’ll get the Labor Department's December JOLTS, ISM manufacturing PMI, and ISM manufacturing Prices. Then the Fed’s statement and rate decision at 2 p.m. followed by Powell’s press conference at 2:30 p.m.??
• Thursday, February 2 we’ll get the weekly unemployment claims data at 8:30 a.m. EST.??
• Friday, February 3 the Labor Department releases the official January jobs at 8:30 a.m. EST. Then the ISM services PMI will follow at 10:00 a.m.?
• Next week is also a very busy week for earnings with $AMD and $SNAP reporting on Tuesday January 30, $META on Wednesday February 1, followed by $GOOGL, $AMZN, and $AAPL on Thursday February 2.

Here's Your Chart of the Week:

Via RBC Capital Markets: Notable here that positioning is well off the lows seen back in October when $SPX made its low.?There is certainly room for higher levels here, but there certainly is also “no one left to sell” as investors have been buying.

Source: https://twitter.com/WallStJesus/status/1617754211911110656/photo/1

SPY Daily / Weekly Update:

$SPY with a big green candle on Wednesday, closing above $400 and the resistance trend line. That low of 393.50 is the higher low pivot for bulls to raise stops to,$410 is the next target for bulls.

We may see the first weekly close above the resistance trend line this week. Bulls are targeting 410 then 420 on the upside - bears are looking for a breakdown back through 398 to head to 390. We have a TON of catalysts coming up this week.

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-Patrick Hawe

Disclosures

Patrick Hawe's current positions:

*As of 12:30pm ET January 26, 2023

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