Is the FED doing too much? 😵‍💫

Happy Thursday traders.

In today’s brief we’ll be breaking down the implications of the latest FED decision, earnings, and what we’re watching on the charts.

Let’s get into it…

Impact Snapshot

• Key Earnings Today:

• Jobless claims drop to the lowest level since February

• US Dollar soars on strong US GDP data 

• ECB Raised key interest rate by 0.25% to 4.25%, highest since 2008

Market Evaluation

The fed funds rate is now at its highest level since 2001 as the Fed attempts to bring inflation back to its 2% target. While the fed signaled further hikes would be data dependent, many investors reckon it’s done hiking interest rates at least until the end of this year.

Back in our previous posts we talked about how well these “investors” were predicting these outcomes. Market has rejected almost all forecasts and done the opposite which lead to yet again, another year high for the SP500 to this day.

This was a short covering rally known as “pain trade” that has been further boosting the upside on those investors “bets” missing out. FOMC is priced in the markets and despite the volatile moves, the context remains the same. ES moved to another year high after a short pullback towards 4574.

We have yet to see any major pullback to test the levels below, as we’ve mentioned, once the “pain trade” boosted rally with short covering ends, it will introduce weakness in the markets.

A strong earnings season so far and the notion that US and European interest rates are peaking are encouraging for stock market bulls.

Signs have also grown that the US economy is headed for a soft landing, lifting the Dow Jones Industrial Average for a 13th straight session Wednesday for its longest winning streak since 1987

Tech sector has been an AI frenzy with all the major companies introducing or announcing major investments on AI technologies. It is very important to note that these investments will need to report hard revenue gains, and ultimately improve earnings potential after that investment.

Market Breakdown

On Yesterday’s session, we’ve warned of the volatility that would enter the market at the time of the FOMC events taking place. Prior to FOMC, ES was ranging below our key pivot and at the time of the events, volatility took the prices to the 4604 zone then back to the bottom support zone at 4573. The only 3 levels you had to know yesterday was these levels with our pivot at 4590 being the middle zone.

Today, in the ON session, ES showed upside continuation as it held and consolidated above the resistance target of 4619 and at the NY open, managed to reach up to the 4630 resistance area, the first target we were looking at since the morning on our pre-market brief on Twitter here. Bulls want to hold the flipped resistance at 4619 in order to target the continuation. The pullback zones are the previous high volume area where a lot of traders participated in the market

The targets we look for until NY close & Targets to pay attention Tomorrow:

• Main pivot: 4602

• Upside Levels: 4630/4644/4660

• Downside Levels: 4590/4579/4560

That’s it for today. Let us know your thoughts! Share this with a friend and have a fantastic weekend.

See ya Sunday.

Cheers.

-The QuantVue Team

Disclaimer: Futures and options trading carries a significant level of risk and may lead to substantial financial losses. The content provided in this newsletter is solely for informational purposes and should not be construed as a trade recommendation or financial advice. It is essential for readers to independently assess and make their own investment decisions, taking into consideration their personal financial situation and risk tolerance.