Scott Redler’s Morning Note: Fed Dead Ahead

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By Scott Redler

We have mixed markets around the world this morning. Europe has positive action with the DAX +0.9%, CAC +1.4%, and the FTSE +0.3%, even with DB profits plunging 100% year-over-year.

Asia was mixed as the Nikkei rallied 1.7% and the yen dropped on stimulus talks. Shanghai bucked the trend and is down 1.9% as they might curb some wealth management products. The Hang Seng rallied +0.4%.

Our markets have been a bit choppy and erratic in this upper area. Strength has been sold and weakness bought as we've tried to figure out if SPX can hold above the 2155-2159 upper zone. If it continues to hold, we'll see if it can break and close above 2175 after the 2:00 p.m. Fed announcement today. Some think they could be a bit more hawkish.

Oil has been a drag as it slipped from $51 to below $43 with no real bounce. We'll see if today's 10:30 a.m. inventory number can turn it around to help broaden the rally a bit.

USO has yesterday's low at $10.02 to watch for a possible RDR long.
UWTI has yesterday's low at $20.27.

Tech has acted much better since last week, when we said it can play catch-up to see all-time highs.

QQQ is opening at 2016 highs. See if they can stay above $114.20 to keep momentum.

Small caps had a choppy day but ended at 2016 highs with the IWM above $120.60. Now see if it extends and holds above yesterday's high of $120.97.

Banks have been flagging since earnings. Maybe a more hawkish tone gets them to clear this recent consolidation.
I'll write down what needs to hold, then pivots to clear to get back on the move.

XLF has support at $23.55 and clearing $23.70 with volume could bring back buyers.
JPM has to hold $63.50 and clear $64.30 to resolve the flag higher.
C has to hold $43.80 and clear $44.40 to resolve the flag higher.

BAC started to go yesterday and cleared $14.40. Holding this can get it back towards $15.

MS started to clear its flag yesterday above $29.15 and it has room towards $30-32.

GS has to hold $159.50 and clear $161.50 to try for the 200 day at $164.50.

High-beta tech is on the move in separate patterns:

NFLX held its post-earnings low Monday and closed well, giving some a clue to be long into yesterday's gap up on the insider buy. Now see if it holds $90.90 as your pivot support.

AMZN has earnings Thursday. I would avoid it until then. Recent support is $729-733.

GOOGL has numbers Thursday. It's been holding $750. It might give a trade above $760.50 before it.

TSLA has lots of headlines flowing. Elon Musk talks up its potential, but also about a money raise. It needs to hold $225 to potentially give another trade above $231.39.

MBLY got hit as news came it ended its relationship with TSLA. But it could strengthen with BMW. It will need some time. It can head into a gap fill if it clears $46.89.

BABA has acted decent since clearing $80.05, but found resistance again at $85. Earnings aren't until next week. See if it can hold $82.60 until then.

NTES woke up Monday and had some follow-through above $201.50 to hit $206 yesterday. There is no setup now.

PCLN is not doing much, but it is flagging after a big move. Support is $1305.

Mega caps:

AAPL had an impressive quarter after sentiment turned very sour. Now maybe with iPhone 7/7+ on the way, this stock could be more of a tailwind. It cleared $100.50 last night, giving us a good entry. If it can hold this, it could be more of a focus with decent resistance at $103.50-$105. First step is holding the gap up. Then, it needs to break the downtrend.

MSFT still acts well but it’s a little choppy and extended. There is no setup but it’s fine as long as it holds $55.50.

IBM acts fine but it’s also choppy. It needs to hold $161 to stay constructive.

INTC had a nice move back towards the highs after holding the 21 day at $34. There is not much to do now.

Social names:

FB reports today after the close as it opens at another all-time high. There is not much to do now. It is priced for perfection. If you are an investor, congratulations. Traders should probably wait until after the report. $122 is the recent pivot high.

TWTR still can't put it together. It's down 10%. There is support at $16.20ish. My options will be at $0. I will let dust settle and see how it shapes up today.

Other notables:

ACIA: after a big move with multiple pivots, it could use a rest. Jim Cramer pumped it last night. I may look for a cute short vs. $65.59.

TWLO is choppy in this tight upper range. It seems like it needs earnings before the next move’s inside range. It has support at $39.50 and resistance at $41.70.

LVS had a gap & go after earnings. I wouldn't chase it now. See if it digests above the earnings gap at $49.27.

WYNN has had a nice move since clearing the $97 pivot. It still has earnings to contend with. $105 offers some resistance.

FCX had a big reversal after earnings. With a bit of time, perhaps it takes out $12.90 to get back towards $14.

Metals are flattish. We have Fed statements today. GLD’s recent low is $125.11 after a corrective move from $131+. It will need to clear and close above $126.40 to bring in buyers.

TLT: I’m not sure if the recent down move priced in a more hawkish Fed. The recent low is $136.98.

Today’s Trading Focus

I'm trying to be long for an additional move that has been tough to get. The action has been more stock-specific. I will stay long SPY and IWM if they hold support and maybe add if they take out resistance pivots. I bought AAPL after the print. I'd like to hold it as a swing and add if it holds $100-$101.

I might look for a cute short in FB as it’s up again pre-earnings. Some profit takers may come in before earnings. I would also like to enter an oil long if it gets a RDR today.

Positions Disclosure: Scott J. Redler is long SPY, IWM, AAPL, JPM, BNSO,
TWTR calls, BABA calls, AMGN calls.

Today's Trading Calendar

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Applications (7/22): prior 1.30%
08:30 Durable Goods Orders (Jun P): exp. 1.40%, prior 2.30%
08:30 Durables Ex Transportation (Jun P): exp. 0.30%, prior 0.30%
08:30 Cap Goods Orders Nondef Ex Air (Jun P): exp. 0.20%, prior 0.40%
08:30 Cap Goods Ship Nondef Ex Air (Jun P): exp. 0.40%, prior 0.50%
10:00 Pending Home Sales MoM (Jun): exp. 1.20%, prior 3.70%
10:00 Pending Home Sales NSA YoY (Jun): exp. 3.00%, prior 2.40%
10:30 DOE U.S. Crude Oil Inventories (7/22): exp. 2000k, prior 2342k
10:30 DOE Cushing OK Crude Inventory (7/22): exp. 500k, prior 189k
10:30 DOE U.S. Gasoline Inventories (7/22): exp. 200k, prior 911k
10:30 DOE U.S. Distillate Inventory (7/22): exp. 900k, prior 214k
10:30 DOE U.S. Refinery Utilization (7/22): exp. 0.50%, prior 0.90%
10:30 DOE Crude Oil Implied Demand (7/22): prior 16963
10:30 DOE Gasoline Implied Demand (7/22): prior 10180.4
10:30 DOE Distillate Implied Demand (7/22): prior 5224.6
14:00 FOMC Rate Decision (Upper Bound) (7/22): exp. 0.50%, prior 0.50%
14:00 FOMC Rate Decision (Lower Bound) (7/22): exp. 0.25%, prior 0.25%

Global Economics
04:00 EUR M3 Money Supply y/y
04:30 GBP Premlim GDP q/q

Earnings

Before the Open:

Altria Group (MO)
Coca-Cola (KO)
Corning (GLW)
Lumber Liquidators (LL)

After the Close:

Amgen (AMGN)
Facebook (FB)
GoPro (GPRO)
Hologic (HOLX)
ServiceNow (NOW)
SolarCity (SCTY)
Wynn Resorts (WYNN)

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Editor's Note: This is a special FREE edition of Scott Redler's Morning Note, which is released at 8:30 a.m. ET each day as part of Redler All-Access.

Please call my team now at 1-888-998-3548 if you'd like to try Redler All-Access for FREE.