The FOMC reaction was bullish. Can longs build on it?

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Don’t Forget: The Long-term performance of the S&P 500, some longer term setups and 5 red flags that showed up before the 2022 bear market

Our View

Remember, today’s session is shortened by the holiday. Regular stock-trading hours for equities will run from 9:30 until 1:00 pm ET. Here’s the altered holiday trading schedule for those of you who will be around on Friday. 

First, the Fed was behind the eight ball and now most Fed officials favor slowing the rate rises soon, but warned that rates could rise somewhat higher than the anticipated level next year. While the news may look like good news, there is still a 50 bps rate hike coming in December and more rate hikes in the first quarter of 2023. Take that for what it’s worth. Rate hikes will shrink and slow, but still go higher. 

I am not going to do a big View today. The stock market is inching itself higher and this fits with the bullish seasonal statistics. The other part is, the MrTopStep Imbalance Meter (MIM) continues to show new money pouring into stocks almost every day over the last 30+ sessions. We track it in the MIM section below to show the last week, two weeks and one month of MIM flow. 

It’s a simple rule to follow, if you want to know which direction the stock market is going…follow the money. 

Our Lean — Danny’s Take

Buy the pullbacks. There is a high level of buy stops that basically go all the way up to 4120. I am not saying we are going to see that today, but I dont think it’s that far off. 

4075 to 4080 is a big area, but to get there we have to clear last week’s high around 4050. Above there we see 4120 to 4130 as the next upside objective. Other levels are as follows:

Upside: 4050.75, 4064, 4076, 4095.50 and 4125. 

Downside: 4023.50, 4012, 3990.25 and 3979.50. 

MiM and Daily Recap

UpDownNet Flow
Last 20 Sessions182$27.4 Billion
Last 1091$19.2 Billion
Last 550$10.1 Billion

In the end, the markets held up nicely and traded strong through the Fed Minutes. Thin-to-win was obviously in play the day ahead of the Thanksgiving holiday and shortened Friday trading session. 

In terms of the ES’s overall tone, the NQ clearly was the leader. In terms of the day’s overall trade, volume was steady. 111K ES traded on Globex and 1 million contracts traded on the day session for a grand total of 1.11 million futures traded.  

  • NYSE Breadth: 65% Upside Volume
  • Advance/Decline: 61% Advance 
  • VIX: ~$20.50

Short trading session, short game plan. 

At least for a day, the markets have handled the Fed news quite well. We all but had a retest of the 4050 level on the ES in the Globex session as bulls remain in control. Today could become yet another “thin to win” day, but it may also lack any real “oomph” due to the lack of participants.

We’ll see, but don’t take anything that isn’t a high-probability setup. Nothing worse than ruining a long holiday weekend with some stupid trades. If still long, continue to raise stops. 

I hope everyone had a wonderful Thanksgiving and day off of the markets. Enjoy your long weekend and let’s get after it on Monday! 🙂 

Lots of updating on the Opening Positions, below. 

S&P 500 — ES 

The ES traded 4049.25 on Thursday. For bulls, I’d love to see a regular-hours charge up toward this area and the 200-day moving average. 

Above this zone opens the door up toward 4100+. 

On the downside, a move below 4030 could put the low-4000s in play. Unless breadth is running sub-25% on upside volume, I’d expect this area to be support. 

SPY — Daily

“Let’s see if the SPY can maintain its bullish ways and get us a tag of last week’s high up at $402.31. Above that puts the 200-day in play, then the gap-fill up near $408.50.”

That was our approach on Wednesday morning and, now that we’ve seen 402.31, it’s still the same approach. 

I want to see if the SPY can maintain above last week’s high. On a pullback, see if the 10-ema is support on the 1-hour chart (below). 

Go-To Watchlist

*Feel free to build your own trades off these relative strength leaders*

  • Numbered are the trades that are open. 
  • Bold are the trades with recent updates. 
  • Italics show means the trade is closed.

Open Positions — 5 of 6 we have now trimmed into profit and raised stops. A sign that the market has been much healthier overall lately. 

  1. TLT — Trimmed on Wednesday’s push into the gap. Now ⅓ to ½ position here. Raise stops (B/E at minimum) and looking for $104.50 to $105 next. 
  2. CCRN — down to ⅓ or less & raise stops. – Exit at $36+ or consider holding for $37.50 to $38
    1. Navigating from here is up to your preference as we have hit several price targets and are up about 20% from our entry last week. 
  3. QQQ — Just down to runners. #cheers
  4. DIA — Just down to runners, if you want. #Cheers
  5. Gold — This has been tricky. Looking to trim 1762 and got 1761.2 today. Hmm. I wouldn’t mind an exit here or at least a trim to reduce size when we’re in the green. I don’t like that it’s not reacting well enough.
    1. I’m going down to ½ size and will cut on any push push over 1760. 
  6. UUP — Trimmed again on continued fade. Down to ⅓ to ½. Trim on any new low below Wednesday’s low. 
    1. For DXY, I would love to exit the rest at the 200-day moving average. 
    2. Move stops to B/E at a minimum but into the green is ideal. 

Relative strength leaders →

  1. LNG 
  2. CAH 
  3. TJX — new highs
  4. SBUX
  5. AMGN
  • CCRN
  • REGN
  • CI
  • MCD
  • ENPH, FSLR — solar has strength 
  • VRTX
  • UNH
  • MRK
  • XLE — XOM, CVX, COP, BP, EOG, PXD
  • SBUX

Economic Calendar

As we all know, there’s no crystal ball when it comes to trading stocks, options, or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk-free for 30 days.
Disclaimer: Charts and analyses 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!

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