January 31st, 2024

Fed Day and End of The Month. Today is very important for a few reasons. First, we get to hear what the FOMC announcement is and what they’re thinking about future rate cuts. Second, we have the closeout day for what I consider the most important month of the year. Third, we’re in an area where the market needs to hold from a technical basis to keep its upward momentum.

Today would be a big day if any one of these were just the focus of the day, but since all three are happening at once, boy, it will be something to watch. Now, I said something to watch, not trade. By now, you know I love the end of the month. It is by far my favorite time to trade each month, but in these conditions, I have to be very picky about trading this close today.

First off, I will only trade the close. I will not trade before the FOMC announcement or right after. I will be looking to trade the close in ES though. Typically, in a bull market, if the first day of January is lower (which it was this month), then the last 5 minutes of the day is most likely a rally into the close. That doesn’t mean we will close higher on the day, but it means we will see a batch of buyers come in at the close today.

In the last 5-10 minutes of trading today, I will be looking to be a buyer of ES Futures. And with the latest update to CME Group’s Event Contracts, making them $100, I will be a buyer of at the money and/or just out of the money YES Contracts, which are essentially Call Options.

As for the rest of the market today: RTY needs a dovish Fed for a sustainable rally. ZN is also in a spot that, based on the Fed’s decision and comments, puts them possibly in an interesting spot going forward for a trending market one way or the other. NQ is not necessarily worried about the Fed, but more focused on the big Tech Earnings which thus far have not been helpful to the bulls, but ultimately not bearish either. A lot to play for in the coming days.

February will be a busy month, so don’t get too caught up in today’s market as the year is just beginning. Be small and smart today or just sit it out and learn something.

Cheers, DELI

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