Ramp City - But Is This Real? (Market Recap)
There’s a scene in the original Top Gun that comes to mind after today. The pilots are at Top Gun and in debrief discussing how they were schooled by their instructors.
They go something to the effect “where’d who go!???!”
I wasn’t shot down today but I certainly didn’t see that move coming.
Coming into today the news was widely based around the ECB meeting - they went full send at 50bps - sending a strong message to the markets.
Initially, my thoughts (among others) were that The FU from the ECB leads to Jerome coming out with 50 as well but they said they wanted to do 50 as to not “scare the markets” with 25bps. - Well, the markets aren’t scared yet but I think they should be.
Not much you can do with a headline of First Republic getting bailed out sending the SPX and Nasdaq straight up. It also helped that Yen Futures came out of a sell zone - and a bearish Yen is bullish for risk assets….either way this move was too fast and way to “emotion driven”.
$3965-$3975 were spots on ES I was discussing all week and we got there but I sat on my hands. In fact, I only took a few light shorts on Nasdaq and called it a day only to see the market run on some bailout headline.
Nasdaq is at a key spot and just about “filled the gap” from 2/16 at $12,730.
Tomorrow is OPEX for the markets and I think we see a massive pin happen.
In fact, that ES zone at $3965-$3975 likely would have seen more seen more sell side pressure but we balanced out after that initial run.
So where do we go from here? Is this a real move or just a head fake into tomorrow and FOMC next week.
I’ll share a few thoughts below and why I think this rally will fade next week.