October 30, 2023

Markets:

U.S. stock futures rose on Monday as traders braced for a big week filled with a Federal Reserve rate decision, jobs report and Apple’s earnings report.

S&P 500 futures added 0.7%, while Nasdaq-100 futures gained 0.8%. Dow Jones Industrial Average futures were up 204 points, or 0.6%.

The moves come after the S&P 500 fell into correction territory last week. The broader index shed 2.5% for the week to put it down by 10.6% from its 2023 high. It’s off 4% for October, on pace for its third-straight negative month which would be its first such streak since 2020 as the pandemic struck.

The Federal Reserve decision looms on Wednesday, where the central bank is widely expected to hold its benchmark interest rate at the same level. With surging interest rates as the main culprit of this stock market correction, investors will be hoping the Fed signals it could be done raising rates. Traders expect the Fed to be done raising rates at least for 2023.

The 10-year Treasury yield jumped above 5% to start last week, but it traded around 4.89% on Monday. Friday will bring the October jobs report with investors hoping for some slowing in the labor market that will allow the Fed to feel comfortable with staying on hold the rest of the year.

Apple will report earnings Thursday after the bell. The S&P 500′s largest member is in a correction itself, down 15% from its 52-week high.

Portfolio:

We enter the new trading week holding set-ups in GEO, TSLL, and AX.  As important today is for trend lines / trading tone.  Be cautious.  The last several pops in futures we received have been faded over the last two weeks.  Fed comes on Wednesday and AAPL earnings on Thursday.  Once we get through this period this week, we are in the clear and have technicals as the main driver with seasonal trades set to kick in.  Trends and historical price activty will kick in as well as election cycle trade / end of year cycle as well.  This is the period we spoke of that can provide the greatest opportunity of returns.  Stay patient over the next few trading session and only trade A+ setups here.  Cannot stress this enough and absolutely expect rollercoaseter price action in this market through the Fed.  You almost feel like they will try to suck everyone in on the short side into Fed / Aapl earnings and this market will then turn and just rip to close out 2023.  The true pain trade.  A working theory based on all the negative headlines and folks wanting to call for market tops.  Let's see how it plays out but we are ready for both sides of the trade and will not fight the trend.  Let's have a monster week!