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Why the FOMC Decision is a Tradeable Event — and a Free Trade Idea!

by | Sep 20, 2022

Wednesday’s end to September’s Federal Open Market Committee meeting will be a tradeable event, which we discussed at length on this week’s episode of The Big Picture With Jeff & Roger. 

I’m bracing myself for a storm, but I think the Federal Reserve will stick with a 0.75% hike to its benchmark interest rate, raising it to a range of 3.0% to 3.25%. 

The Big Picture With Jeff & Roger

The CME FedWatch Tool gives a 100-basis-point hike about a 16% chance, but that would be insanity…

A CME FedWatch chart (The Big Picture With Jeff and Roger)

The market is already in seizure mode, and these people watch stocks, no matter what they say, and they don’t want to cause a crash. 

When you have such a lack of buyer interest while the market’s making new lows, if you raise rates a full 1%, pushing the 2-year Treasury up to 4.5%-5%, you’ll likely see stocks crash another 10% in a day or two. 

They don’t want that… So I see them raising 75 basis points, and I think that’s a short-term, tradeable event. The market is so convinced the Fed is going to go insane with rates that I think it’s over done, and that should be alleviated some on Wednesday. 

They’re not going to keep hiking rates to infinity…

Because here’s the thing… When major economic bellwether companies like FedEx come out and warn of a global slowdown and start laying people off, that’s not random. Companies like FedEx are the heart, blood and soul of the American economy, and they’re straight up telling you business is slowing down. 

They’re not making this stuff up, so you have to listen to these folks if you’re the Fed because it’s going to spill over into everything else. And I see this FOMC meeting as a tradeable event to initiate longs. 

Now if they indicate a pause in rate hikes, then we could see a super rally.

I wouldn’t be surprised if futures are up and then the market is bid up before the 2 p.m. EDT rate announcement, and I see it shooting even higher after the announcement — quite a bit higher. 

BUT, keep in mind… you have to continue trading this market week to week if not day to day, and small positions only. 

So what am I looking at? Believe it or not, I’m looking at some of these Kathie Wood stocks, and I just sent a One Eighty Alerts trade out this morning to go long in PayPal Holdings Inc. (Nasdaq: PYPL)…*

This is one of the worst-performing stocks in the S&P 500 this year, but I see a short-term bounce coming for it.

All that said, a bonafide recession is the best thing that could happen for this stock market because it would mean the Fed is done hiking, and rate cuts would be aggressively priced in. 

In fact, 24 to 36 months from now, I see stocks being much higher than they are right now. I also see new lows before that… So check out The Big Picture With Jeff & Roger, and let’s discuss that and more macro events affecting the stock market. 

Be sure to tune in each Tuesday!

Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!

*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

P.S. Introducing Roger Scott’s NEWEST Strategy!

We’re asked all of the time how traders can participate in our upcoming projects…

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When we have something, you’ll be among the first to know.

And right now, this is us letting you know!

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And he went live this week for the big reveal…

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

WRITTEN BY<br>Jeff Zananiri

Jeff Zananiri

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