December 19, 2024
Markets:
Stock futures bounced Thursday after the Federal Reserve’s revised rate outlook for next year sent the Dow Jones Industrial average tumbling by 1,100 points to its 10th straight loss.
Stocks plunged Wednesday after the Federal Reserve struck a heavy blow to the roaring bull market, signaling that it was likely to only cut interest rates twice next year, down from the four reductions that had been penciled in during their last forecast in September. The central bank also trimmed its benchmark overnight borrowing rate a quarter percentage point Wednesday, to a target range of 4.25% to 4.5%, but the question now is what policymakers will do in 2025.
Chair Jerome Powell didn’t offer investors much in the way of immediate comfort. “We’re at 4.3% — that’s meaningfully restrictive and I think it’s a well-calibrated rate for us to continue to make progress on inflation while keeping a strong labor market,” Powell said at a press conference following the Fed meeting, noting that cutting rates in recent months has allowed the central bank to “be more cautious as we consider more adjustments to our policy rate.”
Leading up to Wednesday’s rate move, Wall Street was betting on the Fed to stay more aggressive in lowering borrowing costs, which affects everything from what companies pay to raise capital to how much it costs consumers to buy a new house or car.
Treasury yields jumped following the Fed’s cautious outlook, further pressuring shares. The 10-year Treasury yield rose more than 13 basis points to cross 4.50%. It was up further early Thursday.
Markets:
We stated at the start of the week we expected volatility this week, but more so due to the Triple Witching day on Friday. Yesterday, that was something else and truly unexpected. Powell was in the driver seat to truly deliver for the market but rather fumbled it with his remarks. BUT, and this is super important, the playbook is still intact and nothing has changed technically for the overall runway. Over the last year we have been firm on this stance; any pullback and knee jerk reactions due to the Fed, political drama, false narratives, threat of War, etc., the Bear were loud on these days but the Bulls would quickly regain control and the true winner in this tech revolution would continue to lead. Every downturn was a great buying opportunity. We believe this pattern will hold true.
With that said, what would be stopping us now from attacking this marmet with both fists….tomorrow. Data and triple witching. It's the only thing causing us pause and wanting us to wait and dabble slowly. Can see one more minor flush before we ramp. Or we could just run higher straight from here…that's also on the table. Just throwing scenerios out there.
As ugly as yesterday was and as hated as that hour was – I know people will hate this and I do too – but that flush was needed technically. Just wish it came on Friday and not yesterday. Our timing was off on it and the maginitude of it was not what we expected either. No one did. SPY has monster support around these levels with the strongest support being at 577. I don't think we get there. But we are sitting on a launch pad shortly. The key is to be patient here and then we attack it. This market has so much more to go.
We enter the session wanting to be super patient, ready for head fakes towards both sides, holding setups in RGTI and IONQ. Be ready, pelase stay patient, again triple witching tomorrow and we expect a bit more volatility before the next leg.