SPY started very green and just ticked up all day heading into FOMC.
JPow announced the 75 BPS hike and then said some sweet words to the market and we blitzed up to 402. What a ride.
Then in afterhours, META had a weak earnings report. Stage is set for a red day tomorrow.
What to Expect?
Premarket Earnings - Pfizer, Tilray, MasterCard
GDP Data Release at 8:30am EST
Afterhours Earnings - Apple, Amazon, Intel, Roku
Premarket Earnings - Exxon, Chevron, P&G
PCE Inflation Data at 8:30am EST
Consumer Spending Data at 8:30am EST
Q2 Employment Cost Index at 8:30am EST
Current Positions and Plays:
I played calls on the JPow announcment since it matched my bullish scenario. My only error here was not getting a slightly better entry.
Holding all cash.
What Do I Think?
SPY Technicals - We hit overbought on the 30 min, and the 1 hour charts. They are now sitting just under it, but just barely. The 4 hour chart is getting close to overbought.
SPY Technicals - We are now comfortably above the big level at 380 for SPY. We filled the 401 gap and are now 404.40 as the next level.
WTF is Going On (Version 5)?
What is the updated boxing match score for this week?
Round 1 went to the bears with WMT news. Round 2 went to the bulls with MSFT and GOOG guidance. I said yesterday that FOMC is worth 3 rounds and I would give it a 2 to 1 favor to the bulls. This is solely in the short term, the report was bearish in the long run. So the bulls have a 3-2 advantage right now on the scorecard for the next trend. Tomorrow we have 3 rounds to award with GDP report, AAPL earnings and AMZN earnings.
Was FOMC bullish or bearish?
For weeks I have been saying in these previews that 75 BPS was bullish for the markets. Yes it is a rate hike, yes it is a bearish one. But this was a binary bet between 75 and 100 BPS. The lower number prevailed therefore the market was not in for a surprise. This rate hike was fully priced in. Now as far as the news we got today from Powell, that was extremely bearish imo. But the bearish action was kicked down until the September meeting. That is 2 months now of runway for the market to not have to worry about the Fed, and that is why we saw the rally we did. JPow is going to kick the shit out of this market soon, but today was not the day.
So we are free to buy calls and sit back?
No. We have some bearish landmines coming in tomorrow and I think we will see a red day. Bulls have to get through AAPL's earnings unscathed to feel comfortable swinging calls for more than a few hours. Thankfully AAPL reports tomorrow.
THE PLAYS OF THE DAY for THURSDAY for SPY:
Scenario 1: We gap down below 396 due to the GDP release. This will clear up a little of the overbought conditions, but I would be looking at grabbing puts if 396 does not hold.
Scenario 2: We gap up and break over 404 due to the GDP release. I will be looking at puts as we would be extremely overbought again.
Scenario 3: We open flat (+/- 2 points) with a negative GDP release. I will most likely wait SPY hits 404 and grab puts again just to play the overbought readings.
No swings overnight tomorrow. With AAPL, AMZN and then PCE inflation data in premarket on Friday, you are just guessing by holding honestly.