Markets Shrug Off Fed Worries
The S&P is teetering on breakout territory
Follow @MrTopStep and @BretKenwell on Twitter and please share if you find our work valuable.
Our View
There’s no need for a long-winded brief this morning. There was a lot of pent-up buying and selling going on before the Fed and I do not think it's over. The S&P 500 is teetering on a breakout, longs are starting to mock the short, the VIX hit a one-year low and the market is calling “BS” to the Fed’s rate plans of “higher for longer.”
That said, in a few hours the focus will shift away from Meta’s ~20% post-earnings bump and the Fed’s commentary and back toward earnings. That’s as Apple, Alphabet and Amazon — a combined $4.6 trillion in market cap — report after the close.
(Then there’s the jobs report on Friday).
Our Lean
Sure we get it right sometimes, but I have known for a long time that as soon as you think you know what the S&P is going to do next, you get burned. We went into yesterday’s event long and after the 2pm announcement, it was bumpy — as one could expect. However, we resolved higher and got to my 4150 to 4175 target zone, hitting a high of 4163.
As for Friday’s 4175 calls, they went from ~$6.50 on the open to almost $20 at the high. Right before the 2pm announcement, they were on sale for almost $3. Just something to keep in mind when taking a limited-risk approach.
Our Lean: