S&P 500 (SPY) Report – 02/02/23

Good morning traders!

The S&P 500 ($SPY) is trading above yesterday’s close. Let’s get into it…

The markets are trading higher this morning after a more dovish tone from the Federal Reserve yesterday, but still expect continued monetary policy tightening. Fed Chairman, Jerome Powell, emphasized the “ongoing rises” that bank officials saw ahead, rather than the Fed’s change in the magnitude of rate hikes. The federal funds rate goal was increased by a quarter of a percentage point on Wednesday by unanimous decision of central bank officials, putting it to a range of 4.5% to 4.75%. While the recent slowdown in price increases is encouraging, Fed policymakers are still not convinced that inflation is on a “sustained” downward trend. Declaring victory or “to assume that we’ve truly got this,” according to Powell, is premature. He stated there was still work to be done. According to Powell, the risk of not doing enough to combat inflation is still far higher than the risk of over tightening monetary policy.

We advise everyone to trade very cautiously today and tomorrow, as Fed interest rate decisions usually cause high volatility for the next few trading days

Long Trade Ideas:

• Shorts were squeezed out of the market yesterday, so we could see continued momentum from the bulls today. While with such a large runup like we saw yesterday, some profit taking will probably take place. Some potential support levels may be yesterday’s high of day at $413.67, and the market close at $410.80.

Short Trade Ideas:

• Some sort of profit taking will probably take place today. While it’s hard to tell at what price level this might happen at, we could see the $SPY pull back to the 9D EMA on a 4hr chart, ~$411.00.

Note: Moving averages are reported from the previous trading session and will change during the next trading session. 

Thursday Economic Events:
Initial Jobless Claims 8:30am – High Volatility Expected
Durables Excluding Defense 10:00am
Durables Excluding Transport 10:00am
Factory Order 10:00am

Fed Speaker Scheduled:
No Fed Speakers Scheduled

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