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I Hope I’m Wrong About This
www.oneoption.com
The FOMC statement might not generate much of a reaction.
PRE-OPEN MARKET COMMENTS FED-DAY – Today the Fed is going to cut interest rates by 25 basis points and they are likely to squash hoped for future rate cuts. The economic data points have been better than feared and half of the officials are not in favor of a rate cut today.
I thought we might see a rally this week that would test the all-time high at SPY $690. If that had happened, we would have had room for a move lower and a “sell the news reaction”. We didn’t get the move higher so we are not likely to get the move lower. I am hearing more people talk about hawkish rhetoric by the Fed along the lines of “one and done”, so that might be factored in and that might be why the market didn’t rally into the statement.
Short-term rates will go down, but the long end of the yield curve will stay high and it will steepen. TLT has been drifting lower and it is spending time below the major moving averages.
The market has been struggling to advance into year end. This is a seasonally bullish period and we are not seeing any conviction by buyers. The last dip was fairly deep and it lasted a few weeks. We bounced off of the 100-day MA on light volume and resistance is building below the all-time high. The rate cut is expected and the actual news is not likely to excite buyers.
The Fed has ended quantitative tightening and banks are visiting the repo window with frequency. If the Fed adds liquidity (QE), that could spark a little buying.
I hope I am wrong and we get a big move. A drop would set up a great put selling opportunity and I would favor that. A breakout to a new all-time high would not excite me and I would not chase it.
Support is at $680 and resistance is at the all-time high.
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