Fresh on the heels of today’s surprisingly low inflation data for the United States, all eyes will be on the big Fed decision ahead. Tomorrow afternoon at 2 pm ET, the Federal Open Market Committee (FOMC; the policy-making body within the Federal Reserve) will reveal their latest increase in the Federal Funds Rate, along with a corresponding statement and a new set of economic projections for the next two years (including interest rate forecasts). Following this, at 2:30 pm ET Fed Chair Jerome Powell will speak at the FOMC press conference, where he will answer questions regarding monetary policy strategy, economic outlook, and more. All these events are likely to cause a great deal of volatility across financial markets, especially as equities investors eagerly await a slower rate hike pace.
With a 50 basis point rate hike forecast for tomorrow, instead of another brutal 75 basis point hike like those that have been implemented consecutively the past several times, traders and analysts will be on the lookout for more signals regarding a further pivot away from hawkishness. They may feel further emboldened in this search in light of the latest CPI data released this morning, showcasing another month of slowing inflation, bolstering stock market optimism and reducing US Dollar bullishness. However, whether evidence for this narrative continues to build has yet to be seen: there is still the chance that the FOMC could further upwardly revise interest rate forecasts while slowing the pace, which would not be quite as bullish for stocks and bearish for USD as it may seem.
Three Indices to Watch
In yesterday’s article we discussed three pairs to monitor for those who are bullish on USD; they remain worth checking on for potential trade setups this week. Today, however, let’s examine three stock market indices worth watching for those who may be anticipating a fundamental catalyst related to potential Fed dovishness tomorrow. Though two receive neutral signals, the EdgeFinder currently offers positive ratings for all three listed below, as can be seen among their respective ratings, signals/biases, and corresponding charts.
1) US30 (Dow Jones) - Earns a ‘3’ Rating, or a ‘Buy’ Signal
2) SPX500 (S&P 500) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal
3) NAS100 (Nasdaq-100) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal
Just before the scheduled shutdown at 12:01 am on Sunday, Congress voted to extend the deadline for another 45 days. Yields jumped higher to above 5.1% which has remained elevated for some time. As we enter an historically bullish month for the indices, here are some setups on dollar, gold and index setups EdgeFinder Analysis […]
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
Hi, I’m Nick! I am the founder of A1 Trading, market analyst, YouTuber, and creator of the EdgeFinder software tool. I caught a huge winner on USoil with the help of the EdgeFinder! In this article, I’ll walk you through my thought process behind the trade and how I found this crazy runner! Finding My […]
