***FOMC Model For The Day – Buy The Open – No Cut – Stocks Bottoming Process***
The stock market model for the day is plus or minus 0.50% until 2pm and then a rally. The model has a higher expectancy of success because of the recent weakness which would make today very actionable for the bulls to buy a down opening.
The FOMC concludes their two-day meeting today with a very much expected result of no action. Although they were never really going to cut now anyway with Jay Powell’s term almost over, the recent spike in crude oil put an end to even the most remote discussion on the topic.
My favorite chart regarding the Fed is below and you can see how the 2-Year Note’s recent rally has put it above the Federal Funds Rate. That means there are no anticipated rate cuts coming. Right now its basically at equilibrium which is a good thing.
The stock market pullback continues in its bottoming process I discussed the other day. The market has completed two steps so far. In the strongest bull markets, that’s all we need to see for a run to new highs to begin. I don’t sense that to be the case right now, but I will happy to be proven wrong. We still haven’t seen a plunge, panic kind of day. If the stock market breaches this week’s low then I do think that will cause one of those big and ugly down days where everyone invokes horror stories. I also think if that happens it will be news driven. Remember, my worst case scenario is the 6500 area.
Finally, someone asked for an update on silver. Recall that I pounded the table about the enormous risk in a parabolic advance. I thought at least a 20% plunge was coming. There is nothing new other than the dumb and weak money has been carried out in body bags. For now, it’s mostly wait and watch to what happens if and when the metal revisits $65 again.
On Monday we sold SSO, some NVDA and some PANW. On Tuesday we bought TQQQ. We sold some XLV.
