S&P 500

Equities Open Week On A Positive Note

Posted Monday, September 14, 2020 by
Shain Vernier • 1 min read

It’s FOMC week and the U.S. equities markets are off and running. Midway through the Monday session, the DJIA DOW (+375), S&P 500 SPX (+55), and NASDAQ (+239) are all deep into the green. With Wednesday’s FED Announcements quickly approaching, it appears as though traders and investors are expecting more dovish sentiment from Jerome Powell and the FOMC.

On the traditional economic news front, there wasn’t a whole lot scheduled for this morning. In fact, about the only American events worth noting were the 3 and 6-month T-bill auctions. Yields fell modestly week over week, coming in at 0.110% and 0.120%, respectively.

Today’s theme is consistent with the COVID-19 economic recovery. The USD is lagging vs the majors, the FED has continued to buy U.S. Treasuries, and investors are giddy over the potential bump in the equities markets. For now, it looks like stocks are the play as the Greenback continues to fade vs the forex majors.

U.S. Equities Rally To Open FED Week

Below is a look at the daily chart for December E-mini DOW futures. The picture is fairly positive, as bidders are driving valuations back above daily topside resistance. At this point, it appears that a test of the Daily SMA is imminent. 

December E-mini DOW Futures (YM), Daily Chart

Here are two key resistance levels to watch for the late session:

  • Resistance(1): Daily SMA, 28020
  • Resistance(2): 62% Retracement, 28293

Bottom Line: Given today’s early-session strength, a test of the Daily SMA is likely. Should this event occur, a shorting opportunity will come into play during the late-session. 

For the rest of Monday, I’ll have sell orders in the queue from 28009. With an initial stop loss at 28056, this trade produces 47 ticks on a standard 1:1 risk vs reward ratio.

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