Equity Resistance, FOMC, Treasury Auctions and Bessent Congressional Testimony

Palantir hit hard

Palantir Tech. is taking it on the chin today as earnings were in line, but the market is discounting their ability to keep up its valuation. Palantir is down almost 14% to $106.84, -$16.93 on the day. Its interesting to note there was massive call interest at $125 strike and well, those are worthless now and once again Palantir is backing off from the same level it did back in February:

Risk is obvious for a continuation now lower and $115 becomes resistance with the target the 50pSMA at $98. We looked at the call and put spreads yesterday and the $110/$100 put spread was $1.90. As far as today, that spread is trading $4.10. If you were lucky to have put this on, well then taking a few chips off early makes sense and maybe hold the rest till expiration and roll the dice. Depending on what your goals are, everyone will have different exits but we are believers in taking percentage based profits. What this means is that you break up your exits by percentages, such as take 25% off at “x”, another 25% off at “y” etc.

Alright in other news we saw a first out of the EU as the German chancellor Merz failed upon the first vote failed to gain the majority required. The second vote was successful but presents the reality that the political sphere in Germany is splintered. This news initially whacked the DAX but soon recovered. It will be interesting to watch the reaction to the 23400 area now:

As far as the Nasdaq futures, the lost the daily support over night from yesterday which is now the resistance level at 19990 and are currently bouncing from 19750 initial support for today:

A close below 19750 would be problematic technically for the bulls and opens the door for the bull/bear pivot line to flip this back to neutral for the complex.

Ok this week we have $42Bn in new US Govt 10yrs begin auctioned off today and $25Bn 30s on Thursday. We also have a congressional testimony from Secretary Bessent in front of congress tomorrow alongside the FOMC decision. The FOMC is widely expected to keep rates unchanged. Here is the CME Fedwatch tool showing a 96.8% confidence of unchanged:

We believe the FOMC can be patient here with rates and we also believe they believe the risks are tilted toward a slow down and not an acceleration in inflation expectations. As far as our US Govt 10yr yield chart the 4.37% area still remains sticky:

So today expect bottom pickers to come in to try and close the opening NY gap here and push the market higher initially, whether or not this is sustainable is TBD. However the overall tone does seem to be technically weak, so we would suspect to see better sellers in the QQQs near unchanged and the market to back off again by later afternoon. Anyway hope you guys have a great day!

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