Fed Day, And SPX Is Teasing The Range Lows Again

Well folks, it’s mid week and mid month, the day the mid term cycle is historically bearish into the end of the month, and we have another decision day to contend with.

Now most of the time these days are odds enhancing for my Premium Popper setups, and the pre and post moves as noted by the STA are often a non starter. That is unless there is a rate change, and even then it’s within normal range of movement. The only time that markets shit the bed is when there is a genuinely unexpected announcement. And even then it’s not as bad as the even rarer black swan event.

Anyway. Trade what you see, not what you think.

Market Snapshot

The market has been advised of today’s decision and has elected to make no arrangements either way.

• SPX 7,585.73, down 34.25 (0.45%). Teasing the range lows again. Full read below.

• RUT 2,870.29. Doing something similar. Full read below.

• BTC 75,853.97, up 269.80 (0.36%). Finally doing something new. Full read below.

• ES 7,671.75, up 8.00 (0.10%). No read today.

• NazQuack (NQ) 29,372.75. No read today.

• Uncle Dow (YM) 52,585, up 14 (0.03%). No read today.

• Uncle Russ (RTY) 2,897.9, up 22.2 (0.77%). No read today.

• Gold 4,376.1, up 42.7 (0.99%). No read today.

• Crude (CL) 104.03, down 1.45 (1.37%). No read today.

• VIX 17.03, down 0.16 (0.93%). A fourth day above 16, and no read today.

Fed Day – Most of the time these days are odds enhancing for the Poppers.

According to the Stock Trader’s Almanac, there have been 147 scheduled Fed meetings since March 2008, and only 20 announced rate hikes among them. On those 20 hike days the S&P finished down 13 times and up 7, for an average gain of 0.10%. The worst single day was 2.50% lower, on 2 November 2022.

The more useful number is the day after. Across those 20 hikes the S&P has averaged a 0.68% loss, up 8 and down 12.

Their broader point is that weakness around a Fed meeting has historically been a buy the dip opportunity, with the best 30 day gains coming when the index closed down on announcement day. A rate hike is the exception, where average performance 30 trading days out has stayed negative.

The CME FedWatch tool had a 94.5% chance of a 0.25% increase as of 4:30pm EDT, taking the range from 3.50 to 3.75%, up to 3.75 to 4.00%.

SPX – Teasing the range lows again.

Just like last week around the 10th, same pattern, price already pushing higher overnight.

I chose a 1-DTE swing and I’ll look to lock in profit ahead of the news, just in case.

A move back below 7,570 will trip the bear triggers again.

RUT – Also doing something similar.

Bullish system setup yesterday, and back bearish below 2,860.

Crypto, BTC – Finally doing something new. Or at least attempting something new.

With a break down and out through the range we have been painfully watching develop since around 25 August.

A push below 74,850 will trip the breakout pullback officially, and perhaps that fall in price I have been calling for for a month.

Sentiment – Continuing to push lower.

The stocks have voted. The index has not yet been informed.

The number of stocks below their respective moving averages is continuing to move lower. All three have now shifted: the 50 day, the 20 day and the 200 day.

SPX index just needs to catch up. Or down lol.

The Premium Poppers

Yesterday’s Poppers pulled a full bag for the community.

A bullseye or two in the profit tents for the transformer trades too.

Wall of Wins

Well done all.

• Don E. Closed both SPX and RUT Premium Popper breakouts for 50% each.

• Don E. Closed SPX LP for 40%. It wasn’t fun watching the trade go negative for a while, but hung in as long as price didn’t close above VWAP. When it touched but fell after hitting VWAP, closed the trade.

• Scott K. SPX BO1, closed for 40%.

• Eddy IR. Closed XSP BO1 for 50%.

• James D. Phew, better day today. Looked at the premarket and took a RUT bear, having broken lower VWAP with a second bar close below. Closed at 50%. Took the SPX LP, closed at 50%. And yes James, that was technically the right thing.

• ehvpsd. SPX and RUT credit spreads both hit for 50%. Has increased the number of contracts being traded, approaching the full allocation.

• i8av6. First day trading SPX with these rules, and a profitable trade. Two contracts. Price went sideways after entry but time decay took care of it, closed at 50%.

• Andy D. Second solid profit tent winner. Just off centre but I’ll take it. Bazinga. I had an 85 too, lovely little bonus.

• Chris. Took the LP 3rd BO and added a debit spread limit order to lock in the win instead of closing it. Got nervous at times, but left it alone and glad of it, since 7,585 was the center

Certainly a more straight forward day than yesterday. And it certainly makes trading through the tricky days worth it.

Bam. Well done team.

Fun Fact:

The Fed’s Target Range Is Younger Than the iPhone Before December 2008 the committee set one number, not two

On 16 December 2008 the Federal Open Market Committee set a target range of 0% to 0.25% for the federal funds rate. Before that meeting it had always announced a single target rate. Today’s expected move to 3.75% to 4.00% uses a format that is less than eighteen years old.

Meme of the Day:

Trade well,

T2 Markets

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