Handling the looming Fed decision…

When it’s not time to buy… or to sell

You may have heard that there’s a key Federal Reserve decision today on monetary policy. 

Why do we care?

Well, primarily because as of late, these decisions have caused quite a bit of volatility in the stock market, and that impacts our bottom line as traders. 

However, ‘news related events’  as I call them, Fed decisions included, are a special breed of data point, because there’s absolutely no way we can predict what Fed Chairman Powell is going to say tomorrow. We can look at the statistics and data points (I have), hone in on technical analysis (been there), make educated guesses (I have a theory), go over his last press conference in Zurich (with a fine toothed comb), but we will still not know until this afternoon what he’s going to say. 

So what can we, as traders, do?…

The key here is that we’re prepared — for anything. 

I’ve been Trader B since yesterday and into today… cautious and waiting!

Following the Decisions?

Some of you may follow what goes on with the Federal Reserve and monetary policy. Many of you likely don’t.

I know that because I never used to pay any mind to it — and, I traded using the technicals just fine. In fact, more than just fine. More times than not, major decisions like the one tomorrow come right at a key technical zone. 

There are far more blissfully unaware traders when it comes to the on-going trade war and tweets, along with monetary policy decisions, and economic data. And to be clear, there isn’t really anything ‘wrong’ with that.

I’ll say that since I began adding this macro backdrop to my technical analysis, it’s given me a better understanding of the big picture. The ‘whys’ and the ‘hows’ — and the potential ramifications of those statistical data points.

Now, I combine the macro outlook with my technicals. But I still use my technicals to actually get into and out of trades. I’d never get into a trade solely based on a potential upcoming news event. It must always be combined with technicals. 

In good news, if you’re interested in learning more, I’ll be posting my upcoming segments along with my analysis and game plan in the media section of this newsletter, and I’ll also be posting my upcoming trades in my Mastery program! 

So, where do we go from here?

I have several key sectors I’m watching for buys (and some for sells), but I’m waiting for the key catalyst — the Fed decision, to make my move.

In times like these, it’s better to remain cautious, and keep an eye on everything setting up to be ready to strike. I’m updating my watchlist right now within my Mastery program, and upon the decision, I’ll be ready to go. 

I’m also going to be discussing the decision, and its impact on the market, on Your World with Neil Cavuto today and again in New York City next week!

While we don’t know what’s going to happen yet, I know exactly what I’m looking for, and what I’ll do when I see it. 

The main pieces of intel I’m interested in are:

  • Noted trade war impact
  • Monetary policy adjustment (if at all)
  • If there are upcoming adjustments planned for the rest of 2019 
  • Overall economic outlook and plan

These pieces of information impact us as traders primarily because if the economy’s strong (or certain areas of the economy), equities are strong and if not, I may look to additional areas of the market (like gold or bonds) and make decisions there.

Good news is, we’ll have that information this afternoon! 

P.S. This decision is perfectly timed with my next live trading session in my Mastery program. It’s happening this Thursday, September 19th! Sign up now to join me, and review last month’s session, in which I discussed watching for the break of resistance (the one that we got)! Check it out here.

Leave a Comment

Up Next...

SPX 0 DTE: Part II

Hey traders! I posted a video on a neutral SPX 0 DTE strategy on Monday, and I had many questions, so I decided to do a follow-up video with a second example. In this video, I cover several questions, including the width of my iron condors, the length of time, the risk-to-reward, and more. Check … Read more

Read More

Trade Review: Using a Neutral 0 DTE SPX Strategy

  In today’s Trade Review episode, I cover a quick SPX 0 DTE trade from last Friday at market close. In this video review, I cover: Why I decided to make a bet that the market would trade sideways into the close How I analyzed the options chain and technical chart patterns Why I decided … Read more

Read More

Butterflies + Put Credit Spreads Combined

A Bullish Earnings Call Last week, in the trading room, one of our members requested that I analyze the ticker AAP. This ticker belongs to Applovin, a company I’ve never traded before. This find is a prime example of the collaborative aspect of the trading room, and it’s why I appreciate our dedicated traders so … 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