Cautious Market Conditions

Hey 5-Star Trader,

Last month the Federal Open Market Committee (FOMC) held one of their scheduled meetings and yesterday their minutes were finally released. In a typical fashion, such news always has an implication on the market. So what do we do now?

Typically, directly after their meeting, I expect the market to experience back-and-forth action depending on the news that surfaced. But this isn’t normally a long-term effect. After the initial panic wears off, I look for the market “returning to the scene of the crime” by hovering right around where it was prior to the minutes being released. 

This time could be different… 

Prior to the FOMC minutes being released, the market was sitting at all-time highs and the indexes were looking pretty extended. The “run into earnings” sprint came early as FAANG stocks — Facebook, Amazon, Apple, Netflix, and Alphabet (formerly known as Google) ㅡ were all rallying upward as well. 

While these market conditions may seem good on the surface, I’m seeing signs that we might be topping out and ready for a pullback and the FOMC chaos could be the catalyst to set it off. 

My plan going forward… 

I’m still holding my positions for now, but I would caution every trader to watch their trades extremely carefully over the next few days. If there is a pullback, I expect it to worsen because everyone will be trying to get out of the market at the same time.

Stay safe traders!

Want more market advice? Join Danielle’s Stacked Profit’s Mastery program. There she gives you real-time entries and exits as well as advice about current market conditions.

Up Next...

TSLA Earnings: Trade Review on a 295% Winner

Tesla Earnings Tesla reported earnings on Tuesday, April 23rd, after making a new low after a new low on the year. This created a situation where everyone (me included) has been bearish on the stock. Last week, I posted a YouTube video about how I shorted Tesla using a bearish butterfly for the move heading … Read more

Read More

My Earnings Watchlist April 22-26, 2024

Volatility is back, and it will only continue to pick up due to the number of earnings reports on the calendar. The indexes are bouncing well today, and the VIX has come back below 17, but that doesn’t mean big movement is done. This is especially true today and tomorrow because we have a critical … Read more

Read More

Using Butterflies to Short Stocks

Market Volatility Market volatility has picked up, meaning there are more downside opportunities than before. When the market starts pulling back, I always try to quantify if it’s a normal “buy the dip” opportunity or if it’s a little bit deeper of a move that means it’s time to short some stocks. Identifying Bearish Alignment … Read more

Read More

Subscribe Today!

Want my up-to-date analysis, setups, top trading tips, and more? Be a Five Star trader, and join my free newsletter today!

Sign Up Now
all-as-seen-on-logos