Welcome back, everyone. I hope you all had a great session yesterday. Once again, the levels provided for the S&P proved to be highly accurate. The market initially gapped up above the 7017 value area high, which then sold off right down to the value area low into the close. My expectation remained consistent for the majority of the week: looking for longs at the 6974 value area low for a move up to 7050 and 7100.
What is interesting is that we anticipated the market would rally to those targets based on how the Fed interpreted recent data. Everything I expected came to fruition: a pause on interest rates and Jerome Powell noting that inflation remains elevated, growth is strengthening, and the labor market is improving. All of this was confirmed in the press conference, along with the additional insight that we have yet to see the peak impact of tariffs on US consumers. With that being the only major concern mentioned by Powell, we will likely continue to rally into the end of the week.
I also want to point out that the trajectory of the S&P has panned out perfectly so far. We anticipated a break over the 6974 value area low for a move to the 7017 value area high. We then expected sellers to step in and drive price down into the high-volume node within the value area. From there, we wanted to see the market bounce and reach new highs. This is currently underway as the market rallies above the 7017 value area high. Please refer to the chart (weekly timeframe) and ES levels for the previous session (Daily Plan 1.28.26):
The levels really didn’t come into play until earnings. Microsoft fueled a sell down to the 6974 which brought a bounce all the way back to the 7017. I expect the rest of that plan to play out in tomorrows session. Now let’s take a turn to how the stocks performed today.
Stock Updates
Two stocks that reported earnings yesterday were Microsoft and Meta. One worked in our favor, as Microsoft saw a sharp sell-off after the release, heading toward our 420 target. If we get a move down to that level, I believe it will be one of the best areas to go long on Microsoft. I will provide more coverage as we approach that target.
On the other hand, Meta did not go as planned. I expected further selling into the upper 400s, but the stock instead rallied above 700 post-earnings. This was a case where I was looking for a dip-buy opportunity that unfortunately never materialized. We can’t hit them all, though I certainly wish we could.
Outside of these two, there is no immediate need to update our other active positions. We will let them ride and see how they develop. The majority are working in our favor, though some are moving against our initial entry. One that has not worked out is Palantir, which broke down out of the daily pennant it had formed. We expected a bounce to the upper end of the pennant followed by a continuation through all-time highs. After today’s session, that setup was invalidated; however, upon a break back inside the pennant, I would expect the stock to surge again and would look to re-trigger a long position. I will post another update when that time comes.
Stock updates will be provided when a target or stop is hit, or when price is nearing either. Ultimately, the market is heading higher, and many of these stocks—along with the broader tech sector—are poised for strong upside. This outlook is based on recent US economic data, moving averages, and the volume profile of the indices. These factors are subject to change, but currently, there are no signs of significant selling pressure.
S&P Levels
The S&P continues to build volume inside the upper value area as we move closer to a normal distribution curve. Overall levels remain the same, as the value area low and high still show little to no traded volume. In a trending market, I look for price to break over a value area, establish a low-volume node, and then build value higher.
