FOMC Countdown: 5 Days To Some Directionality? FedEx Warning an Added Wrinkle Now!
The FOMC Countdown to Wed, 09/21 is now gathering steam with bulls hoping for “peaking” of the inflation/monetary policy hawkishness and bears hoping for a continuation of it. This morning’s dire warning from FedEx about “worldwide recession” is adding another wrinkle to the already complicated entanglement of inflation, interest rates, and potential economic damage any policy mistake could unleash.
On the day we started our 7-day countdown to FOMC (on Wed 09/14), we wrote: “Unless the Fed indicates some super aggressive “future” moves, we could be setting up for some easing in the yields post-FOMC, which could set up for another attempt at a leg up in the equities. But, that is an “if” and the bulls might want to be patient until that clarity emerges. On the other hand, if Powell sounds more hawkish than expected, we could be testing the lows again. It would be prudent to avoid any positional trading in either direction, unless hedged otherwise”.
This morning’s FedEx warning and its stock meltdown pre-market could add some support to the above line of thinking. The market action today followed by Monday could hold some early clues but any sense of clarity may not emerge until the FOMC meeting is behind us.
Positional Trading Models: Our positional models have negated their bearish bias on the NFP Friday, 09/02/22, and are now sporting a neutral bias. No positional trading plans until published otherwise.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for FRI 09/16:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 3860, 3822, or 3806 with a 8-point trailing stop, and going short on a break below 3855, 3847, 3815, or 3799 with a 9-point trailing stop.
Models indicate long exits on a break below 3867, and short exits on a break above 3785. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 09:45 am ET or later.
By definition the intraday models do not hold any positions overnight – the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform’s bar timing convention).
To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) – depending on your risk tolerance and trading style – to determine the signals.
IMPORTANT RISK DISCLOSURES AND NOTICES – READ CAREFULLY:
(i) This article contains personal opinions of the author and is NOT representative of any organization(s) he may be affiliated with. This article is solely intended for informational and educational purposes only. It is NOT any specific advice or recommendation or solicitation to purchase or sell or cause any transaction in any specific investment instruments at any specific price levels, but it is a generic analysis of the instruments mentioned.
(ii) Do NOT make your financial investment or trading decisions based on this article; anyone doing so shall do so solely at their own risk. The author will NOT be responsible for any losses or loss of potential gains arising from any investments/trades made based on the opinions, forecasts or other information contained in this article.
(iii) Risk Warning: Investing, trading in S&P 500 Index – spot, futures, or options or in any other synthetic form – or its component stocks carries inherent risk of loss. Trading in leveraged instruments such as futures carries much higher risk of significant losses and you may lose more than you invested in them. Carefully consider your individual financial situation and investment objectives before investing in any financial instruments. If you are not a professional trader, consult a professional investment advisor before making your investment decisions.
(iv) Past performance: This article may contain references to past performance of hypothetical trades or past forecasts, which should NOT be taken as any representation or promise or guarantee of potential future profits. Past performance is not indicative of future performance.
(v) The author makes no representations whatsoever and assumes no responsibility as to the suitability, accuracy, completeness or validity of the information or the forecasts provided.
(vi) All opinions expressed herein are subject to change at any time, without any notice to anyone.
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