EB Daily Market Report - Brief Update - Wednesday, May 1, 2024

The Fed's decision will be out momentarily. The overwhelming consensus expects the fed funds rate to remain unchanged. The key part of this announcement is going to be what the Fed says about the economy, recent inflationary concerns, and the timing of interest rate cuts. A lot of negativity is built in as FedSpeak has mostly concentrated recently on the potential push back of rate cuts, possibly even into 2025. Regional banks (KRE) have been held hostage during this "war of words" by Fed officials.

Maybe we see clarity this afternoon? It's possible, but do expect significant volatility after 2pm ET.

Transportation ($TRAN) and semiconductors ($DJUSSC) are two areas I'm watching closely. Both are dependent on a strong or strengthening economy - to various degrees of course. Here's where they stand and what we need to watch:

Transportation ($TRAN):

If I'm taking the bullish side of a debate right now, I'm not mentioning this chart. Because it's UGLY. The recent price breakdowns and consistent relative weakness in an area where we like to see much more strength is not a good look. It's only one piece of a very large puzzle, but I'd feel much better if the TRAN reverses and clears its 20-day EMA, at a minimum.

Semiconductors ($DJUSSC)

This situation isn't as dire at the moment as transports, but clearly we've seen deterioration in the group. The first thing technically that semis must do is clear the recent downtrend line. The good news here, however, is that the DJUSSC appears to be much more bullish on its relative chart in the longer-term.

Live Trading Room Update

For members that joined me in this morning's Live Trading Room, I just wanted to pass along that I sold CLX at 140.48 for a $245 profit. I also sold CVLT just above breakeven - $25 profit.

I've also bought INFA (small position) to hold into earnings overnight. I think it's got a lot of positive upside, but we'll certainly find that out after the market closes. There are no guarantees, so please be careful with position sizing in the event of a revenue or earnings miss, or possibly cut guidance.

Let's see what the Fed has to say. Buckle up!

Happy trading!

Tom