How to Lock in Gains During Rapid Market Swings
Mastering technical setups and modeled levels for high-volatility trading
U.S. equities sold off hard on Wednesday as markets digested the Fed’s latest policy decision. The central bank held rates steady at 3.50% to 3.75%, but the forecast is what moved markets. Under new Chair Kevin Warsh, the FOMC projected a year-end fed funds rate of 3.8%, a 25 basis point hike from current levels.
Warsh delivered a shorter policy statement, stripped out the usual forward guidance, and committed to a single mandate: price stability. No hints, no roadmap for the path ahead.
The market’s reaction was immediate. The S&P 500 dropped 1.2% to 7,420.1, the worst reaction to a new Fed chair’s first decision day since 1994. The Nasdaq fell 1.3% to 26,021.7. The Dow surrendered an early record high to close down 1.0% at 51,492.6. The Russell 2000 held up better than the majors, down 0.7% to 2,918.0.
Remember my study about changes in FED Chairs posted last month, everything is aligning. The special studies posted in the Market Intelligence Hub (access here) are a essential tools for long-term investors and traders.
Also the current consolidation is consistent with rare bullish price action observed in April; the study is here:
Bonds moved fast and hard. The 2-year yield jumped 17 basis points to 4.2%, the 10-year added 7 basis points to 4.4%, and the dollar gained ground against major currencies on the back of the repricing.
Geopolitics pulled oil in the opposite direction. President Trump signaled a U.S.-Iran peace deal is close, one that would reopen the Strait of Hormuz to shipping. WTI crude has dropped to a three-month low at $75 per barrel, right at its 200 daily moving average. GLD reversed after reaching our bullish target of 400.7 with precision 🎯, and Bitcoin reversed from the annual zone of $65,9K.
Rate-sensitive names absorbed the brunt of the selling. SpaceX fell 5.0% after reversing from the anticipated resistance of 225; last night I highlighted to subscribers the bearish conditions for SPCX and the implications of being below 207.5, with the bearish target of 189, which acted today as the precise support 🎯.
High probability Setups
9 of the 10 setups posted in the Weekly Compass were correct, 7 reached 🎯 their targets, 2 are ✅ on their way, just one was ● invalidated. 90% directional accuracy, 70% target accuracy, and it’s just Wednesday. Don’t think twice and subscribe.
JPM: Bullish, targeting 329 (+3%), the 337 (+5.2%) extension included in the S/R levels was reached today 🎯.
GLD: Bullish, targeting 400.7 (+3.7%). The top of the week was 402.4 🎯.
LLY: Bearish setup anticipated, targeting 1,115 (-2%); the close today was at 1,112 🎯.
GOOG: Bullish expectations targeting 370 (+3.5%), the high of the week was 373 🎯.
WMT: Bullish, targeting 122.7. (+1.4%) The top was 122.9 🎯.
AMZN: Expected to reverse and reach 248 (+4%), it happened on Monday and Tuesday 🎯.
META: The bounce was anticipated and set to 590 (+4.2%), target was exceeded 🎯.
AAPL: Bearish setup, price action is weak, aiming at the target for the week ✅ .
IWM: Expected to breach 288.8, move is in progress ✅.
MSFT: The only one invalidated, the bounce didn’t hold above 396.7, once it was lost capital was protected thanks to that reference ●.
The Support and Resistance Levels posted here are modeled ahead of price action, and they have proven to anticipate zones where the algorithms react. It’s simple, you subscribe, see the levels, the direction suggested by indicators charted, and then follow with price action. Upgrade now:
Today’s Agenda
Weeks of FED meetings are like weeks when major companies post results, today I’ll present how to manage levels for high probability setups in order to lock gains when they are reached.
SPX, VIX, Breadth and Sectors Update
Magnificent Seven Assessment
How to Navigate a High Probability Setup
Daily Levels for SPX, SPCX, and Magnificent Seven
Non-Tech Setups to Watch
Let’s begin.
SPX - Gap Filled - Technical Levels to Watch
Following Monday’s rally, I warned caution due to the open gap at 7,456. On Tuesday, losing the central daily level of 7,549 served as an early warning sign that targeted 7,521, a level reached by yesterday’s close. Last night, I noted the index’s underlying weakness and the bearish conditions below 7,528. The index attempted to reclaim that level until 10:45 AM today, after which the selling pressure resumed.
Looking ahead to tomorrow, the rest of the week, and the broader month, here is the current setup. A crucial monthly level was lost today, and the VIX is showing signs of a bounce, as illustrated in the chart below: