Starting the Week With a Needed Pullback
We need some individual stocks to reset on the long side.
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Our View
The long trade worked, but the late price action was a little disappointing for the bulls. I think most of the rally was just part of an options squeeze and gave us yet another “Fry-day” result.
This week will be all about the Fed and all about earnings.
We’ll hear from Meta on Wednesday, then Amazon, Apple and Alphabet on Thursday. Those will be the highlight, as the four combined represent just over $5 trillion worth of market caps.
On the flip side, we’ll get the Fed’s FOMC announcement on Wednesday afternoon at 2 pm ET. This time though, the plans seem more telegraphed. The market is pricing in a 99.9% chance of a 25 basis point increase and the Fed has been vocal about getting rates up to about 5% and then going into a “wait and see” mode.
Our Lean
I was in the Keys for a wedding and had a 70-point lead in 2 ES contracts. However, a fellow trader mentioned the late-day weakness in the ES and I checked in with the Mr. Top Step chat room to see what was going on.
The ES had dropped 25 points and the Dow wiped out all its gains. My friend thought the ES was going to be down hard on Monday and I did too, so I got out on the close and this morning the ES is down 35 points.
Our Lean: