Fed Will Raise Rates Today – Buy Calls If This Happens
Posted by Pete Stolcers on June 13
Let’s keep it short and sweet today. The market wants to rally and the dark clouds are parting. The FOMC statement will be released today and the ECB will make its policy decision tomorrow morning. Traders are prepared for tightening by both central banks. Horizontal resistance is at SPY $280.
The summit with North Korea went well. We don’t have any details and this will be a drawn out process. Rumor has it that Kim wants to move forward quickly and he has demonstrated this through a few unexpected concessions.
As long as that denuclearization of North Korea progresses, Trump will be more inclined to negotiate a trade deal with China.
The market shouldered the G6 tariff news (aluminum and steel) and that is a sign that stocks want to move higher.
Economic data points have been excellent and stock valuations are in line (forward P/E of 16).
Everyone is expecting a quarter-point rate hike today. If the Fed sticks to its plan for one more rate hike this year the market will rally. The press conference will be scrutinized for any hint of accelerated tightening in 2019. Traders are also prepared for the end of quantitative easing in Europe. The ECB will make its statement tomorrow.
Swing traders should buy the SPY if it is above $280 in the last 5 minutes of trading today. That is a major horizontal resistance level and a breakout would be bullish.
Day traders should be patient this morning. We will be “dead till the Fed”. Use the first hour range as your guide and expect quiet trading. I will wait 15 minutes after the release and I will go with the flow. The press conference will follow the FOMC statement so make sure to pay attention to the reaction after that. A rally above SPY $280 would be very bullish.
We have been waiting for clarity this week and we will have it today.
I would love to buy a pullback, but I don’t think will get one.
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