Market Grinds Higher Into Rate Announcement 


Simpler Trading Team

Jan 31st 2023  .  3 min read

Market Grinds Higher Into Rate Announcement 

Market futures slowly moved lower throughout the night as it prepared for a big test at 4,000 on the S&P 500. When the market got close to 4,000 and the 15-day SMA at 4,010, buyers stepped in and stopped the decline. This support helped the market bounce back up.

Early Trend Reversal Leads to Big Day

Markets started to bounce back before the official opening bell. The S&P 500 futures were initially trading lower than the average price of the day, but as soon as bulls started to step in, the trend quickly changed. The market continued to rise and didn’t show any signs of slowing down.

The Nasdaq was showing more strength than the Dow right after the market opened, leading to a bit of confusion among traders. But soon, the Nasdaq’s rally, driven by the upcoming earnings reports, started to push markets higher. With prices consistently above the Volume Weighted Average Price (VWAP), a bullish trend quickly took shape.

Buying Pressure Holds Into the Close

Markets saw steady buying pressure but without any drastic jumps. This could be because big investors are getting ahead of potential changes coming this week, such as the Federal Reserve rate announcement. They are preparing for any possible outcomes and positioning themselves accordingly. Regardless of the reason, the market had a clear direction and purpose today.

Despite starting down nearly 1% before the market opened, the buying volume increased throughout the day, pushing the market to reach new highs and end the day with a close of about 1.2% higher. Although the strong recovery may not appear as significant because of its starting point, it was still a recovery of over 70 points from the pre-market low, even though it was a bit less in the actual market session.

Levels to Target Tomorrow 

There are several levels to look for tomorrow as volatility and a possible big move can be expected. Starting with that 4,100 level, it becomes the line in the sand as the events unfold. Anything above 4,100 can continue to send the market soaring. Another 100 points in the S&P 500 futures would get the market to the 4,200 level, which the market has not seen since last August. 

If this level sends the market lower again, targeting the 4,000 level would become viable as the 21-day exponential moving average (EMA) sits at 3,996. 

Month Ends on A Positive Note

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 1.36%, adding 54 points, while the Nasdaq futures closed up 1.47%, gaining 182 points. The Dow Jones futures followed, closing up 1.04%, an addition of 343 points.