Post Tech Earnings and FOMC – Providing Credit to Retail Investors | Mish’s Market Hours

Microsoft and Alphabet, Inc. reported better-than-expected earnings after business hours, and follow-up during the trading session may allow sellers to lock in profits or fall short. After all, technology has done much of the market’s heavy lifting to date. Profits are already reflected in the price. And according to the headline in this Daily, many individual investors are starting to see the light ahead of the FOMC, when logically the Fed will pause and not be too dovish.

The smartest traders stopped buying big tech companies before they made a profit. And the wise man started selling after hours and until early morning. A smart person can hold his position, but at least have a profitable trailing stop.

What can we make of the NASDAQ’s gap and the FOMC’s bullet points? If you look at the Nasdaq futures chart… Although they were trading low on the day, there was no gap between Tuesday’s close and Wednesday’s high, so it’s not terrible. What we can see is that there are currently 17,535 areas showing resistance to liquidation, and if so, the immediate impact of a decline in the Nasdaq price could easily be a one-day affair. However, we must be open to the idea that Nasdaq is maintaining its resistance to this day without resolving it.

What will be the impact on the FOMC announcement?

Here are the main points of my comments:

• The FOMC does not expect to cut interest rates until it has “greater confidence” that inflation is moving toward 2%. (Good luck. Considering 2% is not realistic, especially when considering economic growth as well as government spending, debt, geopolitics, etc…)
• The FOMC judges the inflation target to move toward a better balance with the risks to achieving employment. (In a perfect world best-case scenario, or what we call normalization, where inflation and the federal funds rate are aligned and the economy is booming).
• FOMC: “Any adjustments” to interest rates based on incoming data, evolving outlook, and risk balance. (In other words, assuming that no matter what crisis occurs, you can stay ahead of the 8-ball without falling behind)
• The FOMC said it was “very cautious” about inflation risks and that the economic outlook was uncertain. (Perhaps the most relevant comment: it is uncertain and leaves room for interest rate cuts if necessary)
• FOMC: Economic Activity Expanding at a “Robust” Pace (Yes and no. Some are declining, others are steady, and very few are actually expanding.)
• FOMC: Job Growth has eased since early 2023 and remains strong (Except I think job growth has peaked and layoffs are becoming more prevalent).

The initial reaction of the market today was anxiety. However, it often takes at least 24 hours for the market to digest the FOMC minutes. So far the glass is half full and half empty.

Today the bunch is half empty.

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• S&P 500 (Spy): 480 is now a pivotal area.
• Russell 2000 (IWM): It has 195 backbones and 190 supports.
• Dow (HE): Supports 375.
• NASDAQ (QQQ): Supports 415.
• Local Bank (KRE): You must have 50 keys in your hand.
• Semiconductor (SMH): Supports 184.
• Transportation (IYT): 262 is now resistance.
• Biotechnology (IBB): 135 is the key.
• Sleeve (XRT): 70 still needs to be cleared to remain very optimistic.

Misch Schneider

MarketGauge.com

Director of Trading Research and Education