Some thoughts on tomorrow’s Fed announcement
Plus: how I expect the market to react
Tomorrow, the Fed makes its big December rates announcement:
To cut or not to cut, that is the question.
If you go by the betting markets — and I’m not a gambling man, but I have seen that Vegas often gets it right (strange how that happens with money on the line... ) — then we should expect another quarter point cut.
That’s what I’m expecting too.
Now, here’s something strange about how the markets operate that you only know if you know:
The market often “bakes in” the expected news BEFORE it happens.
In this case, if we get the expected rate cut in the market, they it will probably not move the markets much in any direction.
Because the move has already happened.
Instead, the market will make its big swings around the unknown data. Namely, what Fed chairman Powell says in his speech afterward and how that’s interpreted for future rate cuts.
Also known as speaking hawkish (negatively) or doveish (positively).
One of the reasons I personally favor using technical indicators to drive my decisions instead of fundamentals is because of how fast information moves.
By the time I find out about the news, the move is usually over with.
That’s the case with most retail news.
People behind the scenes have already seen some of the moves and made their own bets with the market (I don’t necessarily mean insider trading, though I’m sure that does happen. I mean that many bigger players have more resources to gather data faster.)
Sure, a few big fundamentals are important to keep in mind, but I mostly trade off the charts.
Because I can see a lot in a glance.
Chart reading took me years to learn.
Like any skill-set, I had to spend thousands of hours practicing before I got to a point where I can glance at a chart and have a pretty good idea whether it’s likely to move up, down, or sideways.
That’s not a 100% success rate, but I do have an edge.
I’m not quite ready to teach the advanced things I do to read the charts and give me that edge, but I do teach the basic system I use to make money from the markets — whether they’re moving up, down, or sideways.
For those who are ready, I share the link to that system in the footer of my emails.
But if you’re new here, then everything starts with a free subscription.
For anyone who subscribes, I also give them complimentary access to my 30-minute “Options 101” mini masterclass. It teaches the foundations of my trading system and gives you a taste of what my flagship course is like.
That journey starts by tapping this link:
— Ricky Ketchum