SPY started red and lost the 393 support. It broke down to 390 and caught a minor lift into the close.
Then in afterhours, MSFT and GOOGL reported their earnings. Both missed but did some sweet sweet talking on the conference calls and rallied the market. Bears everywhere are punching the air. Yet another reminder to not hold anything overnight this week.
What to Expect?
Premarket Earnings - Shopify, Boeing, Spotify
FOMC Meeting Summary + Rate Hike Decision at 2pm EST.
FOMC Press Conference with Jerome Powell at 2:30pm EST.
I played calls like a fool and completely ignored my plan. The day presented me with my Scenario 1 and I completely ignored it... "Scenario 1: We gap down below 393. Sit back and see if it can reclaim it, if it can't play puts to 390. This is probably the most likely scenario given the WMT news. "
Holding all cash.
What Do I Think?
SPY Technicals - We are neutral on the 30 min, and the 1 hour charts. The 4 hour chart is slightly above neutral.
SPY Technicals - We are now comfortably above the big level at 380 for SPY. Next major level I have is 396.33.
WTF is Going On (Version 3)?
Yesterday you said this week was like a boxing match, with the Bears taking Round 1. Who won Round 2?
The bears definitely carried the momentum from WMT in afterhours to the entire regular session today. I would say they had it all in the bag until 390 held as support and then MSFT and GOOG's earnings saved the market. Bulls sneak out a win in Round 2 and we are now even. Next event is worth 3 rounds with FOMC and JPow's presser so tomorrow is a big big day.
Why did MSFT go up after missing earnings?
The saying in real estate is the three most important things are location, location, location. Well on earnings, the three most important things are guidance, guidance, guidance. And MSFT gave beautiful guidance. Now whether that is going to happen or not is another question, but the fact they put that pressure on themselves was all the market wanted to hear.
It is FOMC Day! What are you looking for?
I think 75 BPS is in the bag so that should not shock anyone. The thing I will be watching for is if they tip their hand for September and say 50 BPS is likely. That will cause the market to be setup for a rally. They have a break in August, so the next meeting is in September. That is a long time to not have to worry about the Fed, so that September hint will be key. Side note, at 2pm you will see the market tank immediately and recover instantly. It is an amazing thing to watch so turn on the 1 min charts and. enjoy.
THE PLAYS OF THE DAY for WEDNESDAY for SPY:
Scenario 1: We gap down below 390. Sit back and see if it can reclaim it, if it can't play puts to 385. (not likely given the afterhours action)
Scenario 2: We gap up and break over 393. I will be looking at calls to 396. I will then exit and just wait for FOMC.
Scenario 3: We gap up above 396. I will avoid everything until FOMC.
Scenario 3: We open flat (+/- 2 points). I will most likely wait until FOMC and just play the trend.
FOMC Scenario 1: 75 BPS and 50 BPS hint, buying calls and riding them into the close.
FOMC Scenario 2: 100 BPS hike, buying puts for a few weeks out and just sitting on them.