The Fed Will Raise Rates Today, but What Will Powell Say?

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I think the higher the index markets go, the thinner the rally will get. I was thinking about how much these markets have changed. They are so mechanical and it brings me back to my old saying that “these are not our fathers markets or charts.”

Will the ES / NQ sell off today? I imagine so and it should be led by the Nasdaq. It's one thing if the Fed says “no more rate hikes” and another if they say “another rate hike in September.” Currently, markets are not pricing in another hike…not just in September, but for the whole year. Instead, they are expected rates to stay at current levels for the rest of 2023 and then get cut sometime in 2024.

The PitBull said that everything is so overbought. I responded by saying it's been that way for weeks. Will the Dow’s 12-day winning streak end today? I think the odds favor it — and it’s why we have been so quick to reduce our long position in it, even though it gave us a big quarterly rotation over the Q2 highs (more info under the Open Positions section).

However, I also do not think the upside trend is over. In a nutshell. I think you have to be careful, with all the sell stops building up, there could be some big sell programs after the Fed. Powell’s presser almost always brings up the volatility.