The Fed left rates unchanged today which was expected as the market was pricing in a near 100% chance of there being no change going into the decision. The odds have not changed much since today's decision and Powell's presser. Currently the first cut is being priced in for the June 17th meeting with a 47.5% chance of a 25bps cut. Markets didn't react much to today's decision, but tech led once again with the Nasdaq closing up 0.32% while the S&P was flat with a 0.01% decline and the Russell 2000 lagged again with a loss of 0.49%.
Big tech earnings also started to come in after hours with META being the big winner, gaining about 9%, while MSFT is the big loser and is down over 5%. I've been posting the recent bullish flow in META from my flow database for weeks on X/StockTwits going into the report including a big call buyer last week for nearly $10M which had already gained almost 50% ahead of the report and will be an even bigger winner tomorrow. AAPL will be another big report for markets which comes out tomorrow after the close.
Let's look at the technicals going into tomorrow. The first level I mentioned in yesterday's update for the Nasdaq was 25,975. This was key support/resistance from two daily trends. It gapped above that level to 26,121, so the 25,975 level became support. It also pulled back to retest it which held as it bounced perfectly off of it, putting in a low of 25,974.66. It did break through its prior uptrend resistance at 26,025, which was also monthly resistance, so that prior uptrend on the daily is no longer valid. However it did not break through any other support/resistance levels so all of its other trends remain the same and it doesn't start any new ones.
The first big level to watch tomorrow will be at about 26,170. This is its current support/resistance from the primary uptrend (white). Now it closed today at 26,022 which is well below that level, but futures are currently higher thanks to META's earnings. So it is possible that it gaps up above this 26,170 area tomorrow but it is pretty far. If it does gap above it then it will remain as support, and if it opens below it then that area will be resistance. After that, the next support level to watch will be at about 26,060 (blue) from the prior uptrend support. It closed below this level as well but will likely open above it given how futures look right now. In the event it does open below 26,060 as well, then that level (blue) would also be resistance. Support after that would be at 25,870 (yellow) but it's very far and unlikely to come into play tomorrow.
The S&P broke above 7,000 today for the first time in history, but it closed back down at 6,978 and actually had a failed breakout on the daily. Since it did make that higher high, it still starts a new uptrend. S&P futures are also higher after hours right now so it's possible we also see a gap above resistance tomorrow, similar to the Nasdaq. But, the key level to watch for now will be at about 6,990 which is the retest of the failed breakout that it had today. If it does gap above that level then it becomes support and vice versa if it opens below it. The next resistance to watch would be at about 7,015 from the new uptrend it started today. Meanwhile, support would be back down around 6,900 over the next couple of days if markets were to pull back.
For small caps, the Russell 2000 lagged again, and it was a weak finish for the day. But, it did break through its downtrends from yesterday and it retested and held them as well. Yesterday I took a long position in IWM which I sold this morning on the gap up. I noted that it was likely to gap above those downtrends due to how strong it finished yesterday, and that I was looking for a move up to around 2,690. It put in a high of 2,685.86 which was near the open, and since it opened near my target I took profits on the gap up.
I also got long IWM calls again during Powell's presser as the Russell held its retest of the 2,646 area which was the downtrends that it gapped over as well as weekly support. So this area now is a good risk/reward for a long. On the daily it did start a new downtrend today, even with the close above its prior downtrends. But, the risk/reward remains favorable here as its already near the bottom of this new range with several supports underneath it. The first support to watch for tomorrow will be at 2,636 from its new primary (white) trend. Its prior trends will also be supports at about 2,625 - this is also another key weekly support level as well. Resistance on a bounce will be at about 2,684 which is also from its primary trend and just below today's high.
