Market Update: Federal Reserve Shake-Up and Opportunities for the Week Ahead

The stock market experienced a wild ride last week, with the Federal Reserve shaking up the landscape on Wednesday, resulting in a sharp selloff. However, Friday brought some relief as the markets attempted to rebound off key support levels. Let’s dive into the market indices, discuss the trading game plan for the upcoming week, and explore actionable setups from the watchlist.

Index Analysis

• QQQ (Nasdaq 100):
  • Wednesday Selloff: A sharp intraday drop of 200 points followed the Fed’s announcement of fewer anticipated rate cuts in 2025.
  • Friday Rebound: Bounced off the 50-day moving average, but the late-day dump (likely tied to options expiration) left uncertainty heading into next week.
  • Key Level: Needs to hold above the 50-day moving average for bullish continuation.
• SPY (S&P 500):
  • Undercut the 50-day moving average before remounting it by the end of Friday.
  • The index reclaimed a critical breakout level, setting the stage for potential upside.
  • Key Level: Needs to confirm strength above Friday’s high to validate the bounce.
• IWM (Russell 2000):
  • Dropped significantly mid-week but managed a 2% rebound off key support.
  • Key Level: Watch for follow-through to determine if the small-cap rally can resume.

1. Volatility Remains High:
   • The Fed’s revised policy outlook spooked investors, highlighting the importance of staying nimble.
2. Rotation Opportunities:
   • While large-cap tech showed weakness, other sectors, like travel and consumer discretionary, are stepping up.
3. Support Levels Tested:
   • Major indices bounced off critical moving averages, providing a starting point for potential upside.

1. $PLTR 

• Setup: Strong breakout fueled by news of inclusion in the QQQ.
• Key Level: Watch for follow-through above $100.

2. $MSTR (MicroStrategy)

• Setup: Oversold bounce off the 50-day moving average.
• Key Level: Needs to hold $400 for continuation.

3. $AVGO

• Setup: Pulled back into the 9 EMA after a strong earnings pop.
• Key Level: Watch for a breakout above $60.

4. $ASAN (Asana)

• Setup: Pulling back into the 20-day moving average after a post-earnings breakout.
• Key Level: Weak open and bounce off $25 could offer a great long entry.

5. $LULU (Lululemon)

• Setup: Retracing post-earnings gains, with a breakout level near $400.
• Key Level: Watch for continuation above $390.

6. $CCL (Carnival Corp)

• Setup: Strong earnings momentum and breakout potential.
• Key Level: Needs to hold above $17.

7. $META (Meta Platforms)

• Setup: Sitting at the 50-day moving average.
• Key Level: Look for a bounce above $300 to validate support.

1. Watch the Indices Closely:
   • The QQQ and SPY need confirmation of Friday’s rebound for bullish setups to hold weight.
2. Focus on Breakouts with Volume:
   • Names like $ASAN, $LULU, and $Pltr are exhibiting strong volume patterns that indicate continued interest.
3. Be Ready for Shorts:
   • If the market rolls over, weak names like $AMD and $NVDA could offer opportunities for quick downside trades.

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