Big Earnings Loom Over Choppy Trading Day

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Our View

The ES was mostly range-bound, trading between 6090 and 6040. As I mentioned in The Lean, it was a two-way street—sell the rips and buy the dips.

One thing worth noting: despite the choppy two-way action, volume in the ES is still pumping. Yesterday’s total volume came in at 1.5 million contracts. I bring this up because, before the election, daily volumes were much lower—just under or just over 1 million contracts. Now, even on a quiet day, we’re seeing 1.5 million.

There were no surprises from the Fed. After a reckless 0.50 bps and 0.25 bps rate cut, Powell’s comments were fairly hawkish, showing less optimism on inflation. As a result, the ES closed down 20.50 points, and NVDA dropped 4%.

NVDA hit its lows after reports that the Trump administration had been discussing potential restrictions on the company’s chip sales to China following the DeepSeek AI model developments. For the week, NVDA is down more than 13%.

The NQ was down 1% at one point, but after 2:00 PM, it started to catch a bid, which I accounted for given the post-bell earnings from MSFT, TSLA, and META. Meanwhile, the yield on the 10-year note settled at 4.554%, slightly up from Tuesday’s 4.548%.

Traders likely expected a busier session, but as I said on Twitter, it was a chop shop—no major headlines and no big moves.

There isn’t much in the way of economic reports today—GDP and Initial Jobless Claims at 8:30 AM, followed by Pending Home Sales at 10:00 AM. However, some big names are reporting earnings, including CAT, AAPL, and INTC (who else?).

Maybe I’m wrong, but I don’t think we’re going up or down significantly. The ES and NQ need some road repair—back-and-fill action and some good news. I’m just not sure where that’s going to come from, and Trump limiting NVDA chip sales is certainly not good news.

I expect a wider range today, but again, I think it will be a two-way street. Keep an eye on the 10-year yield and NVDA. It seems like 6025-6040 is solid support, while 6090-6120 is resistance. You can take it from there.

MiM and Daily Recap

Wednesday’s E-mini S&P 500 futures (ES) opened the regular session at 6087.25, just beneath the overnight high of 6111.50 set during Globex. Early on, buyers pushed the contract to test 6091.25 shortly after 10:00 a.m. ET, marking the morning’s intraday high. However, the market soon reversed, and by midday the tone turned defensive. After several failed recovery attempts, prices worked lower, eventually printing a session low of 6042.25 near 2:18 p.m. ET—roughly a 49-point swing from the morning peak.

From there, the ES staged a modest afternoon bounce. The contract climbed back above 6060, making a couple of secondary highs in the 6080 area but never recapturing the morning’s best levels. By the regular-session close at 4:15 p.m. ET, the futures settled at 6068.25, down 19 handles (–0.31%) from the opening print. Volume ran near 1.498 million contracts, suggesting a steady level of participation, with traders actively reacting to the day’s intraday swings.

In the brief cleanup session that followed, prices edged up to 6076.50, ultimately leaving the ES down –0.23% from Tuesday’s full-session open to Wednesday’s close. Despite multiple quick rallies, each push higher was met by selling pressure, indicating traders’ caution about extending gains. All told, the futures traversed a wide range, reflecting an ongoing tug-of-war between buyers defending key support levels and sellers eager to fade intra-day strength.

Overall, Wednesday’s action suggested a moderately bearish to neutral bias, with sellers winning the day’s net direction but not stamping out all buying interest. Although the ES did rally off the session low, each ensuing uptick faced stiff resistance in the 6080s—an indication that participants remain on edge. Headlines and macro uncertainties continue to fuel an environment of two-way volatility, keeping traders quick on the trigger when price reaches short-term extremes.

The Market on Close (MOC) imbalance stood at approximately –$401 million, favoring the sell side. While not overwhelmingly large, this negative tilt likely reinforced the afternoon’s reluctance to sustain rallies into the final minutes. Still, the market seemed more rotational than outright bearish, characterized by back-and-forth swings rather than a decisive trend down.

Looking ahead, traders should watch whether the ES can hold support around the 6040s, or if another wave of selling pushes it toward deeper levels. Meanwhile, any sustained push above the 6100 mark could embolden the bulls and spark additional short-covering.

In the end it was a slow day. In terms of the ES’s overall tone it acted better than the NQ early then acted worse late in the day when the NQ rallied. In terms of the ES’s overall trade, volume was steady at 1.5 million contracts traded.

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Fed Muted, All Eyes on GDP, Core PCE … Two Trades

Response from the market to FOMC and the Federal Reserve Press Conference was muted … at best. SR3H2026 … or Three Month Interest Rate Futures to the Secured Overnight Peg for the March 2026 Term (which is now what we call ‘The First Red in the Red Pack’) wobbled by maybe 4 whole ticks (nothing in terms of relative movement), and ended up and is now trading at the time of this writing exactly where we were before the Press Conference.

SR3H2026 – 4 Hour Chart

That small, infinitesimal red square, was the action during Fed day. Or looking to the intraday …

SR3H2026 – 10 Minute Chart

At the time of this writing, we haven’t moved one inch. This tells us the market is much more interested in the GDP numbers today, as well as Core PCE Inflation numbers tomorrow.

Two Trades

So at the moment we are playing things very, very conservatively. Besides the Treasury Bills we hold (small retail accounts could use the ETF … TBIL), we only have two small (and we do mean … ‘small’) positions on at the moment.

What we refer to as the “Widows and Orphans Sector” (low volatility, higher ‘aristocrat’ dividend stocks) had experienced a nice pullback as of late. You can gain a good view of this arena via the ETF … SPHD.

Invesco’s S&P 500 High Dividend Low Volatility ETF – SPHD – 4 Hour Chart

So we picked two names from that sector, and have established what we call a ‘whiffleball’ entry. Actually, that’s the name a business partner of mine calls them. As part of the risk model, if a full sized position is X% of ones buying power? The ‘initial’ entry is X(0.15). Or, 15% of a normal, full-sized position as an initial entry. If the trade has to be cut as one was wrong? It allows you to cut with a smaller loss than usual. If however, the trade turns around and begins to head higher … you can then scale up and add to the position as the trade begins to move in your favor.

So we first took a position at X(0.15) into Colgate (CL) at $91.12. Actually, we still like the trade despite the small pullback. Besides, the X(0.15) position sizing allows the view the risk of the trade in a rather detached manner …

Colgate (CL) – 4 Hour Chart

After this, we took another X(0.15) into Pepesi (PEP) at $154.51. Again, we have pulled back, and are more than fine with this as we move forward …

Pepsi-Cola (PEP) – 4 Hour Chart

We can thus ride through GDP and PCE with ease, knowing that our position sizing is keeping us safe. Both trades begin to work out and rally higher? We can then add to the position in such a scenario.

Until next time, stay safe and trade well …

Trading Room News:

Polaris Trading Group Summary: Wednesday, January 29, 2025

Overall Market Context:
It was FED Day, meaning heightened volatility and choppy price action, requiring traders to stay nimble. Early trading followed the expected DTS scenarios, with downside targets hit, while the FOMC announcement caused sharp repricing action in the afternoon.

Morning Session:

Midday Action:

FOMC Announcement (2:00 PM – 3:00 PM):

Closing Thoughts & Lessons Learned:

Key Takeaways:

✅ DTS nailed the lower target at 6075, reinforcing the value of preparation.
✅ Quick scalp trades were key—trending trades had low conviction.
✅ Market repriced FOMC expectations, requiring traders to adjust quickly.
✅ FED Days require extra caution—it’s a day to manage risk, not push for home runs.

A tough but educational trading day with solid setups and risk management lessons! 🔥

DTG Room Preview – Thursday, January 30, 2025

Stocks slipped on Wednesday as markets awaited the FOMC decision and major tech earnings. As expected, the Fed kept rates unchanged but removed language indicating progress toward the 2% inflation goal, stating instead that “inflation remains somewhat elevated.” Fed Chair Powell declined to engage with President Trump’s criticisms of the Fed’s stance.

Big Tech Earnings Recap:

Cybersecurity Concerns:
Israeli firm Wiz discovered a security flaw in DeepSeek’s AI assistant, exposing over a million lines of data. The issue was quickly patched, but the simplicity of the breach raises concerns.

Earnings Lineup:

Economic Data to Watch:
GDP, GDP Price Index, and Unemployment Claims (8:30 AM ET), Pending Home Sales (10:00 AM ET).

Market Outlook:
Volatility remains moderately high, with whale bias slightly bullish despite light overnight volume. S&P 500 (ES) is trading within its short- and intermediate-term uptrend channels, with key support at 6049 (50-day MA) and resistance at 6200/03, 6405/10. Both bulls and bears have room to maneuver today.

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!