Pre-Fed
This week brings the two-day Fed meeting beginning on Tuesday. Expect a light-volume trade in advance of the session.
S&Ps are up 360 pts at 1238.60 on moderate volume overnight — but well above fair value. For today’s trade, we have a neutral zone between 1239 and 1241. If we get above this zone, we expect the market to trade back to Thursday’s high of 1249.30. We have resistance between 1249 and 1250.50.
We have support between 1234 and 1232.50. If we get below this, look for the market to test the reaction lows on Friday of 1228.50. In addition, we have Thursday’s low of 1226.50 just below that.
NASDAQ is trading up 1950 at 1772.50. If we open here, we will open right here in a small resistance zone between 1770 and 1775. Above this, we again have the leftover upside gap at 1806 and our critical resistance between 1790 and 1810. Remember, Thursday’s high was 1793 and Friday’s high was 1792.
We have support between 1755 and 1745. If we get below this level, we would look for a move to Friday’s low of 1710. We have support between 1715 and 1705.
The Dow is expected to have some recovery today after the MRK news on Friday. Not expecting a whole lot of activity. However, it will be worth watching financial components within the Dow to see if the betting on Wednesday’s Fed-meeting outcome will be a 50-basis point cut.