Daily Plan 1.31.24

Hey traders-

Some times it is what we do not do that matters more than what we do.

Today was a good example of this.

We warned our folks we can not be bullish as long as NQ stayed below 17800.

A lot of traders today were in short term calls on names like GOOG, AMD etc which we warned could see a dip ahead of the FOMC.

Not only this was a good call, my other targets, like the one in EMINI 4930 AND TSLA 185 PUT for FEB 2 were met today, shared at 195.

See below.

I share such updates with folks throughout the day and you can also now easily access them by subscribing to the channel below. Always take a nuanced view based on the order flow rather than chase popular opinions which amount to buying at high of the day.

My levels for tomorrow

Now tomorrow could be a significant day with FOMC as well as the monthly end flows.

We are now trading right back down at 4930 at the time of this post.

I am expecting some volatility to continue tomorrow as well before finally settling down later in the week.

I may share additional details and updates in the chat room with subscribers once the FOMC gets going. My primary position right now about the FED path is that they will not be cutting any rates in March but I expect MAY to be a decent spot for first rate cuts.

On top of this , I am not expecting any further rate cuts below 4% or so on long end of the curve. I think these 4% or so rates are here to stay for a year or more. In fact I am not expecting any surprise at all from this FED tomorrow when it comes to what it has already said about the rate cuts, though I think Powell himself may take a less nonchalant approach when talking about these cuts.

The elephant in the room is going to be the discussion, if any about the end to quantitative tightening.

At time of this blog, FED is allowing about 95 billion dollars a month balance sheet rolloff. The bank reserves have dwindled but not dwindled too much to cause any discomfort to the workings in inner plumbing of credit markets and certainly the overnight repo facilities have remain well behaved.

I think the FED is about 4-5 months away from ending the Quantitative tightening process but will not like to talk about it tomorrow. HOWEVER, and this is a BIG however, if the FED commits to any language tomorrow about the QT ending, this could be rocket fuel for the equities.

Though I do not like to do any super formal plans for the FOMC days, I have few thoughts on the price action, and be prepared if the FED as much as whispers anything about either reducing or stopping QT altogether in May-June time frame.

If you look at the bond market, via TLT as a proxy, it seems to give some credence to the possibility that the FED could discuss ending QT tomorrow.

The other dimension to this equation is the earnings calls from today in names like AMD, MSFT, GOOG etc

Specifically in AMD, I am getting reports from folks down heavy in both longs and options hoping for 190-200 today after the earnings.

The stock is down about 6% after hours. I think this adds more complexity tomorrow if these stocks manage a rally, then these bag holders could want to get out, if they can, and that could add pressure on general market. I think due to the heavy long bias in AMD today, I will not be surprised if it were to sell down into 150.

Due to factors listed above, I am inclined to think that 4954-4955 may present resistance if tested.

Scenario 1: 4955 could be resistance for a move back down into 4922-4930.

Scenario 2: With the FOMC in full swing, note that there has been an active seller in last week here at 4922-4930. Generally I think if we are below 4922 in the FOMC, then there is a risk of a test of 4892.

At time of this post, we last traded 4930.

On related market side, I think all eyes could be on AAPL.

AAPL

AAPL has sold off quite aggressively today to close the day near 187. I think 182-183 is an important level and if this holds, we could see another retest of 190.

AMZN

AMZN earnings are tomorrow. It is now trading around 157.

150 is an important level on AMZN. I think if this level holds, we may see a test of 160-162 on AMZN. This is why I am keen to see if AMZN sells down into 150 or low 150 post FOMC. If so, this could be a good spot for a move back into 160-162.

This is it for now. Like, share and subscribe for more levels.

RIVN

As much as TSLA has been under pressure, I think it tends to benefit other EV players like RIVN.

It is now about 15 and change but I think 14.5-14.6 level could be a key level in Rivian. This could be an important Line in Sand (LIS) in RIVN.

I think if this level holds, we may want to test 18 on RIVN.

~ tic

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