 Hey everyone, this is Mike Kramer of my capital today is Tuesday, July 25th. That's around seven o'clock New York time So tomorrow Wednesday at two o'clock Eastern. We'll be getting the FOMC rate decision expectations are for a 25 basis point rate hike you can see that basically the market is giving it a 97% chance Additionally the market's weighing about a 50% chance for an additional rate hike before the end of this year It appears the market is targeting that November date for a second rate hike. So this is something to watch for tomorrow. Obviously The market would be surprised if there weren't a 25 basis point rate hike so it seems likely that the Fed will and Most likely what the market is suggesting from the Fed fund futures at least is that J Pal and the Fed are likely to leave Optionality on the table and indicate that there is likely one more rate hike to come and that will be dependent on the data and I will also add that I think that they're likely to indicate that if more needs to be done They'll do more And that rates are likely to stay, you know high and restrictive For some time until they are sure and confident that the tightness of the labor market is not going to spill into higher inflation rates Additionally, when we go out and we look at the ECB meeting that will be on Thursday morning New York time you can see 96% chance for a rate hike of 25 basis points come Thursday and Market is pricing in You know about an 80% chance that there will be another rate hike before your end Again, I think Lagarde is also going to leave that optionality on the table And you're not going to likely see much deviation between the two central banks. I think this week And so that will take us to a review of where we are right now We'll start off with the NASDAQ because I think that We finished with the NASDAQ last night and we were talking about a couple of interesting things The first thing being that we had been above the upper and Bollinger ban for some time You can clearly see now we've come back in to that Bollinger ban now This is the fourth day that we're back into it. So certainly we're no longer in overbought conditions At least based on that metric and here's the 10-day exponential moving average So yesterday we had noted there had been three days below the exponential moving average And that had been the longest period of time that we had noticed Notice since really the beginning the middle of March that we had been below the 10-day. So today We were talking also last night about you know the appearance of some sort of triangle wedge for me Maybe a descending triangle given the week close. I thought that there was a chance we might gap lower and trade lower today Instead the market decided to gap higher That led to a move up almost about 75 basis points on the day. It took us to a rough resistance area of around Right around this 15,600 region now Clearly again, we had a pretty weak close. It seems like we've been getting these strong openings followed by weak closes It seems to be a regular Regular occurrence lately you can see that even on Friday We had a strong open and then we had a week close Monday we had a strong open and a week close today. We had a strong open rallied all day We finished above the above the opening print But we basically finished almost flat to the high of the earl that almost flat to the early high so Again, these are these seem to be like movements that we're seeing where you're getting these strong openings And then you're giving back in the final Hour to a trading and again tomorrow will be a different day because you're obviously going to have an FOMC meeting And that's potentially is going to skew how the market reacts now Again, you've also had some pretty big earnings out after hours at least as of this recording You have the NASDAQ trading down about 25 basis points or so nothing Terrible so that would indicate that we're likely looking at at least as of right now a lower opening So if the bulls want to continue to remain in charge here You're gonna want to see the NASDAQ, you know gap higher again Like we've been seeing and continued to push higher which would certainly with a gap at 15 825 still lingering Again, if the bulls are going to try to push this thing that seems like a likely area Although that seems really aggressive Given the fact that you're going to have an FOMC meeting tomorrow afternoon Plus you already have the markets trading lower So this really creates a little bit of an interesting period tomorrow Again, so you're gonna be looking for the gap above this 15,600 if you can get that Maybe you can trade a little bit higher throughout the morning. I have a feeling though given that we have the FOMC meeting You're likely to see a fairly Range-bound market during the day if we gap lower tomorrow right off the bat You're likely to see a refill of this gap to 15,450 The interesting thing that I noticed about the Dow Jones industrial average and we're gonna tie this in with the DAX Is that you can see again we talked about this yesterday? Being that you have You know now one two three four five six seven eight nine ten eleven twelve Green bars in a row and what's interesting is that? This green bar was what you'd call I guess a doji pattern a day of indecision Because the index only really finished up about eight basis points so barely eaked out again on the day The other thing that's obviously interesting here is when you go in and take a look at this pattern it has a look of a potential ending diagonal and You can even see going into the close we close below the the bottom trend line And here is your top trend now What's interesting is that you also have the same pattern and in the DAX currently? And what's interesting? I guess about it is when you overlay the two charts You'll see that the timing of it At least on the hourly charts you'll see that the timing of it. It's very similar It it took the Dow a little bit longer to get up there in terms of with the DAX But again, it's very it's a very similar sort of look to it where you've been you can see that the two are Consolidating in this sort of rising wedge pattern What could be you know an ending diagonal triangle? Which would be indicative of an index that's going to trade lower so we focused on you know this downward shifting trend line in the DAX and We don't really have that same downward shifting trend line in the Dow And so if we use the DAX as sort of a leading indicator potentially to the DAO It could be telling us something about the direction of the DAO Number one you have a DAX index here that has traded, you know again. Here's your your trend line Has almost three quarters of the of the of the characteristics of a diamond pattern again You don't have the full characteristics of one, but you have three quarters of one You certainly have what looks like a pole here, and then you have this rising diagonal or rising pennant and this would certainly be indicative of a bearish reversal pattern on top of the fact that you have this trend line in place Additionally, you've had now pretty bearish momentum overall in the DAX for some times with you know The DAX basically lodging a putting in an RSI of 80 Back on November 15th, and really RSI has just been making lower highs while the DAX has been making higher highs Which is a bearish divergence although it has been a very long one Which indicates again that you're seeing that loss of overall momentum, and you can see that the decline the As the DAX has moved higher those increases have been on a lower and lower scale So again depending on how this is sort of shaping up and setting out You know if you were to take out this trend line again, we talked about this already But on the DAX at least if you were to take this out tomorrow Then it seems likely you're going to test 16,270 pretty easily and I think after that you're talking about filling this gap up to 16,350 Clearly a breakdown of this is going to be a very bearish indicator because you have Basically a straight line rally from this point on which means that once you take this out There's a chance you could fall all the way back down to 50 you could start trading all the way back down to 15,800 in the coming days When you look at the DAO Again similar looking pattern. We just talked about you can see the ending diagonal You can see we closed just a little bit below it When we look more closely here, you can see again We're in an overbought condition where you have the RSI over 70 although the DAO has moved back It was in the upper Bollinger band So it's not as overbought as it had been but again, it is still overbought and We have what also looks like that rising diagonal So you have these two conditions that are also Leaning towards this idea that if you don't get the DAO to quickly snap higher tomorrow You know take this level out here at 13,000 call it 500 You know very quickly if that can happen then you have room to at least move back up to 35,000 550 or so the the area in which you're going to start hitting resistance is going to start becoming a little bit of a problem because again, if you if you move higher tomorrow and all of a sudden your next Your next area of resistance is going to be somewhere in this 35,600 region so it seems like The DAO is again up 12 days in a row. It's due for something in terms of a pullback It certainly appears like there is a formation of a potential pullback Coming here and when you couple that with the formation in the DAX it certainly also suggests that we're looking at a pullback and Again, it really is going to depend upon how they can open these markets tomorrow If we get one of these forceful opens like we've been seeing More recently in the DAO in the SMP Then that's going to allow it to continue to move higher But that's going to also mean that you're going to have to quickly go from around 35,000 450 To around 35,000 five and a quarter As soon as we open tomorrow if you can get a nice 7500 point pop in the DAO quickly You can continue to move higher. Maybe even trade along this upper trend line Maybe trade along the upper Bollinger band, but if you can't and you're looking at a move lower, which is Let's face it becoming a more and more of an odd as every day that you trade higher because Markets don't go don't only go higher that would potentially set you up for a decline back to 35,000 to 20 And then you have these gaps that 35,000 and 50 and then another gap at 34,000 950 And then of course or a total retracement back to 34,000 580 or so so that's where we are right now. I hope you have a great rest of your week. Bye