Last week, again the market moved in range with $SPY and $QQQ hitting our key levels as projected on both the downside and the upside, with volatility from some major tech earnings. We were able to take profits on some of the names like $BA, $TSLA, $AMZN, $MSFT, and $BABA with 1 loss on $META spread. Then we closed the week with a quick 1-hour trade on $FSLR puts for over 150% gain.
This end-of-April stock market gauge shows investors are brushing off banking, debt-ceiling, and recession worries. But will it last and carry over to May? Thursday’s first-quarter GDP report revealed that the economy is slowing, but the much-predicted U.S. recession hasn’t arrived because consumers are still confident enough to keep spending.
Will we have “sell in May and go away?” We may not know until this Wednesday when the Fed may give the market some hints. The most crucial question facing investors is whether policy makers subsequently show a willingness to hold off on further rate rises in order to assess the damage from their year-long campaign to lower inflation.
The Fed is widely expected to deliver a 1/4 interest rate hike when its meeting concludes on Wednesday. They’re factoring in an 84% chance of another quarter percentage point hike. A surprise “hawkish hold” by the Fed — or pause accompanied by a signal to remain vigilant in the fight on inflation — would be the move that would most stabilize financial markets.
“This next Fed meeting is an important one because if policy makers raise rates by 25 basis points and don’t signal a pause, markets are not going to like this,” according to Greg Faranello, head of U.S. rates at AmeriVet Securities in New York. If they do pause, it may be time for investors to jump back into equities and bonds, both of which could rally over the next six months.
On the technical side, the $SPY just got back over its 50% Fib. with a close > $415 on Friday with a possible C&H break out at least to test $420 pivot by Wednesday or consolidate back down to $410-$408 and wait for the Fed’s decision and hints on Wednesday afternoon. The $QQQ broke over the $415-$420 range on its 3rd touch on Friday. Now either it would continue to 50% Fib at around $330 or consolidate back down to $316-$315 and wait for Wednesday’s Fed hints.
With Earnings on $AAPL, $AMD, $SHOP, $COIN, $SQ, $QCOM this week, we should have some good Single trades and possible some Bull Put Spreads. Have a Happy and Prosperous May to all of us. Namaste!.
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