Tomorrow is Fed day. It starts @ 12:30pm ET with the policy announcement, followed by the Fed’s forecast sometime between that and (drum roll please), Uncle Ben’s press conference around 2pm ET. Until the fun starts I doubt anything will move much. We are for sure in ‘Santa rally mode’ and today was a great example of it. It wasn’t that the point move was all that large, it was just the way the market moved up with no ratcheting back until the roll-over all the way back to the opening range. I was up .5% on the day by shorting that vertical ramp of the morning. I also got short again into the close on the big bounce up to and then past VWAP (all ES).
I’m feeling like the perfect way to disappoint the most people right now would be to finally get a pull back. In normal times I would have played this with higher exposure but I’m aware that the Fed / Gov must be quite concerned about having as much green showing in the market as possible to help out the holiday shopping season. So, as usual, risk is high for a run up to the 1440 – 1450 range. Like it or not though, I’m going to play this going into tomorrow short and, if I have to, working my way out of the position if the Fed goes ‘all in’ (AGAIN). Welcome to trading central planning, political innuendo, gov press conferences and headline reading algos for the preceding .
My final advice, if you can, trade small until the fireworks get fully underway and you can trade it.