What the Fed Won’t Tell You
It’s pre-Fed Tuesday, and I don’t trust this market sell-off…
It also happens to be the day before VIX expiration.
Currently, there’s an 84% chance that the Fed will raise rates to between 300-325.
Image from CME group
Since we know the Fed will be raising rates, we are seeing a phenomenon called “pre-FOMC drift,” where we see a sell-off pre-Fed then a drift today, the day before the Fed meeting.
If the market breaks the low of the day, and VIX breaks the high of the day, I will change my tune, but until then, I think the market will drift higher into tomorrow.
And there are two big things holding the market up today…
First, Apple Inc. (Nasdaq:AAPL). As AAPL goes, so goes the market…
And today, it’s holding strong, currently trading at $157.00.
Image from wallstreet.io
As long as AAPL holds, I think the market will ease a bit higher again.
Next, the VIX.
Volatility is also guiding the S&P 500…
Here you can see the inverse correlation between VIX and the S&P… and when VIX moves, the S&P moves the other direction:
In expectation of this gentle ease higher, I have some options plays in mind to trade.
Every weekday I trade the SPX expiration and this week is no different. Even though the market has been volatile so far this week, I think we are likely to see a slight drift higher through the end of the day.
JOIN US in the Expiration Trader room to play today’s butterfly if you’ve traded them before.
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I’ll see you then,
September 20 2022
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