Today is the highlight of the week, with the FED ending the 2 day meeting and coming out with its tactics for the immediate future. The language will be pivotal for the reaction of the market. If tapering is suggested to be more aggressive and fast approaching it can stress the market into a downward move. If the attitude is too dovish it can be taken as a sign that they don’t take inflation seriously, therefore there is a fine line that needs to be discussed by Powell and packaged in a way in which the volatility needle doesn’t spike too high. I am out of tech for today, waiting for the highlights in order to have some market discovery. I am still involved in the small caps, which are less affected by the FOMC. I also plan on buying some Friday call options in the banks ETF, the $XLF, in case the Fed decides to be more hawkish. It will be a small position, just to cover all sides of the action. If the banks go up significantly I will maybe get involved with stock.
The small caps delivered and them some yesterday, making a new all time high. I hope you followed my advice from the past days and took part in this 8 point move. Today it will be a volatile day, and it also may mean a digestion kind of move for the small caps. Trim into strength and watch for the $IWM to hold around $232 in order to show strength.
After making a new all time high last week, the banks ETF has been muted, barely holding the 8 day EMA, and today seems pivotal in choosing its direction: it will either become a bear flag or a leg for a move higher. I am buying some call options for this Friday in case the FED proves to be hawkish, with a minimal chance of losing a few dollars, in case this sector gains momentum.
I did not put up the $SPY or the $QQQ today because I waiting patiently for the afternoon FED talk which I already mentioned a thousand times. I am just doing that for you to pay attention to this, because it is a catalyst which can shape the near future, and being on the right side of the coin matters for protecting and producing capital. Don’t rush into things as volatility will spike and things will go over the place until we hear the language of the FED chair. If you are interested in a scalp stay next to your screens in the last 2 hours before bell close as it can be an interesting time to create some cash flow. We’ll give you updates on Twitter and try to guide you through this.
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