Yesterday the market got the rate cut it expected and mega cap tech stocks reactions were good.

PRE-OPEN MARKET COMMENTS THURSDAY – Yesterday the Fed cut interest rates by 25 basis points and they are ending quantitative tightening (QT) which is another form of easing. Powell said that another rate cut in December wasn’t a “given”, but he certainly didn’t reject the idea. Banks continue to tap the Fed’s overnight repo facility and that is a sign that liquidity is tight.

The earnings reactions have not generated much of a reaction. META was down, MSFT was flat and GOOG was up. After the close today AAPL and AMZN will report.

The trade talks with China seemed to go well. It is important for the two leaders to meet. Overnight we are hearing that China has still not lifted export restrictions on rare earth minerals and during the meeting NVDA’s Blackwell chips were not discussed. These are two “sticky” points. China controls 90% of the world’s supply and these magnets and they want these chips. Both countries are battling for AI dominance.

The S&P 500 is down almost 30 points overnight and global markets were down marginally.

The rally the last week has been very “fluffy”. We’ve seen light volume gaps up and those can easily be erased. I suggest treading cautiously. Our ideal set-up is a test of the breakout at SPY $674 and a violent bounce off of it. That would be a great entry point for longs into year end.

The longer the government shutdown lasts, the more likely we are to revisit that level. There doesn’t seem to be much progress, but the rubber is going to meet the road when millions of people stop getting food stamps next week. Democrats have been getting pressure from their own base and I expect them to pass the CR in the next week or two.

Support is at $682.11. That was the low from Monday and there is a gap to fill. Resistance is at the high from Wednesday.