Ahead of the Fed Update. Plus, a Low Risk, Unlimited Potential Option Trade

Markets are vulnerable to disappointment today.

Markets are vulnerable to disappointment because of the Fed’s rate announcement this afternoon.

In the early going this morning, stocks and bonds are in wait and see mode ahead of the Fed’s interest rate cut announcement at 1 PM Central time this afternoon.   But that could change instantly.  The market is split between a 25 and a 50 basis point cut in the Fed Funds rate.  Interestingly, our recent poll is leaning heavily toward 25 basis points.  If you haven’t voted, register your opinion here.

The U.S. Ten Year Note yield bounced higher at the open this morning suggesting that some bond traders are a bit fearful of what the Fed may do.  Still, the short term concern is whether TNX moves back above the 50-day moving average, near 3.93% in response to the Fed’s move.

The New York Stock Exchange Advance Decline line (NYAD) is a bit ahead of itself, although it is exhibiting upward momentum.  Still, NYAD is trading outside its upper Bollinger Band and the RSI is at 70, which means that the odds of a reversal are above average if the market doesn’t like what the Fed says and does.

Expect a volatile trading session after the decision with more volatility during Powell’s press conference.

In this issue, I am tidying up our open positions while adding a new option trade with low downside risk and unlimited upside potential.

Thanks to everyone for your ongoing support.  I really appreciate it.

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