Notable levels from yesterdays session (Stocks & Futures)
Emini 4136 long level held nearly all session moving into FOMC along with Nasdaq which both hit target after the anticipated spike on 25bps decision. From here once we began the presser, shorts were planned to be executed and shortly after noting the tide is turning, price snapped lower hitting new lows in both indices. Not only calling out Futures but calling out exact option contracts with strike to go along. My plan moving forward is to also give option plays with futures. Eventually you will know exact contracts I would be looking at as to pick which strike is the easy part.
To add more, 4 Nasdaq trades were taken which 1 stopped out B/E and the other 3 blossomed to great winners bringing a solid cushion moving into FOMC.
Once FOMC came not a single trade went south!
The day only got better as I predicted what will happen before yesterdays open and even had the plan in the Weekly Outlook. Break higher on the highly anticipated 25bps print which was an extremely overcrowded trade. I called for a pop to take off into which we saw and never was able to break above my 4168 level that Bulls needed to take for any sort of direction higher.
Quickly I want to just show some of the contracts called out in the room which saw massive returns ranging from 100-200%.
There are many more updates sent out in telegram which include my notes taking live during the FOMC.
Now lets jump into what FOMC provided and what changed from the last meeting.
Recap of yesterdays events
FOMC Notes:
NO indication of a pause and Powell's language was off today, almost confused.
Credit Tightening: Banks lend more on the long end but recently were giving high rates to low credit consumers. Banks are falling behind on deposits while raising rates. When the Banks are the holders of capital and not lending it out that is a form of tightening as this is not given out as loans for growth in the economy.
2% target on inflation remains
Wages aren't the principle driver of inflation and doesn't see a wage spiral happening. While the wages have reaccelerated this is not something of worry right now.
Services Inflation which has been on watch has not come down yet and remains sticky.
Powell even noted that we are in a housing bubble.
Corporate margins will decline bringing more pain for companies.
We should start to see unemployment on the rise and need to keep a close eye on this moving forward.Yesterdays Thoughts on FOMC:
FOMC is currently pricing in a 25bps hike which is in line with what I think will come. Realistically we hiked 50bps last FOMC meeting with tightening of credit conditions and I think that will be the same case for todays session.
Post-FOMC I expect an impulse move up then collapse Emini into the close on Powell remarks. Recent developments in data have shown the battle on inflation is a struggle needing more tools than just hiking interest rates.
Powell needs to address the current housing market conditions as prices are through the roof with banks handing out these garbage loans. Unless they stop this we will have another 25bps at the next meeting too.
Recap of last FOMC:
FED anticipates further rate increases with a reduction to its Treasury Security holdings, agency debt, and agency-backed mortgage securities.
Recent developments showed modest growth in spending and production with increase in Job gains on record lower unemployment.
Confidence in the US banking system is sound.
Events
Earnings
