September 18, 2024

Markets:

Stock futures rose slightly Wednesday as Wall Street anticipated the first Federal Reserve interest rate cut in four years. Gains were muted as uncertainty lingered over how big the easing will be from the central bank.

The Fed is expected to deliver its latest policy decision at 2 p.m. ET. The central bank is expected to lower rates by at least a quarter percentage point, but traders are divided over how big the reduction will be. CME Group’s FedWatch tool shows traders pricing in a 65% chance of a half-point cut and 35% odds of a quarter-point move.

It’s unusual to have this much uncertainty into a Fed decision as the central bank typically tries to telegraph its next move to the markets. Traders had believed for most of the last month that the Fed would lower by a quarter point, but the idea of a super-sized cut began to gain traction in the past week.

The options market shows that traders expect a sizable move for the stock market on Wednesday, according to Goldman Sachs.

Portfolio:

FOMC day and regardless of how we react, what matters to us is how we respond tomorrow!  The day after these events or better yet, the next few sessions after these events, have always been the ultimate indicator for the trend to come for weeks until the next event.  But, beyond excited to have today here and get through this event.  Once done, election cycle will begin shortly thereafter and we also begin to build for the exciting year end trade.  

Another solid session yesterday and we enter the session holding set-ups in SNOA, ASTS, UPST, CPNG, and TSLL.  SPY levels we are watching today, upside 565, downside 555 level.  Some support at 560 but the real line to the downside is 555 now.  

Expect chop.  The most important takeaway is not if there is a .25, .50, or no cut but that the Fed delivers clarity.  If that is delivered, regardless of initial reaction to a cut or no cut, the clarity of a plan will help set the stage for the markets.  

Stay patient, do not get caught in the swings.  Be ready and on alert especially this afternoon.