Why You Should Be Bullish Heading into Fed Day
09/17/2024
Hey Trader,
Yesterday on Trade to Close, I noticed something intriguing about the market.
Last week, we didn't see an immediate premarket jump on the catalyst—it hesitated, then rallied afterward both times. To me, that’s the market saying, “I wanna go up!”
Or... is the market just pricing in what it wants from the Fed’s decision tomorrow? A rate cut, perhaps?
Here's the problem with that last theory: when something’s priced in, you usually see a "buy the rumor, sell the news" reaction. If the Fed gives the market what it's been baking in, here's the likely chain of events:
Immediate bullish pop when the report drops.
A "sell the news" dump, flushing out all the "weak longs" Wall Street loves to toy with.
A strong rebound that could take us to all-time highs by Friday.
Sounds crazy, right? But Mark and I live for this—we trade this event every time because, hey, we’re the cool parents of the Close. Expect to see violent reactions in the market, no matter which direction it moves!!
My motto: always be on the right side of the market, baby. I’ll take the ebbs and flows, as long as I can trade it. Come trade the Fed with us tomorrow—you won't want to miss it!
Click right here for your weeklong FREE TRIAL of Trade to Close!
Market Moves Spotlight
By Mark Sebastian
Heading into the FOMC minutes, the market is pricing in about a 60-point move in the S&P 500.
That seems fair, but if I had to pick, I’d say it’s on the cheaper side.
Fed fund futures are currently pricing in a 59% chance of a 0.50 rate cut. Just last week, that number was down to .30, with a 0.25 rate cut almost guaranteed.
I believe the market has this wrong—we’re almost certainly looking at a 0.25 cut, with room for more easing later.
When that happens, we might see an initial pullback, but it’s actually the more bullish outcome. It signals the Fed isn’t overly worried about an economic collapse, which could push the S&P higher.
On the flip side, a 0.50 cut could be seen as bearish.
Coming out of this, I still like the Russell 2000 to lead.
Fed week is always fun to trade, so join us here for a free trial of Trade to Close!
Always be closing,
Olivia Voz and Mark Sebastian
