The Fed’s day is here! What to expect?

US stocks performed well yesterday

On Tuesday, the US stock markets rose after the CPI data.

All the major indices, S&P 500, Nasdaq and Dow Jones have reported gains of 0.73%, 1.01% and 0.30% respectively.

The positive movement has been driven by the CPI data released yesterday showing better than expected inflation numbers.

The inflation forecast was at 7.3% and the actual data has been 7.1%.

The Fed’s decision is today

Today at 7 PM GMT, we will hear the Federal Reserve’s decision on the next interest rate hike.

The Consumer Price data, released yesterday, show that the worst of the inflation is probably passed and for the Fed is easier to moderate the pace of the interest rate hikes.

It is projected that there will be a rate increase of 0.5% after four consecutive hikes of 75 basis points.

Investors are expecting a pivot however that doesn’t mean that the Fed is ending its fight against inflation.

Jerome Powell is very likely to announce that the rates will go higher than previously forecasted.

Markets will react accordingly and it will be very volatile today.

S&P 500 Technical Analysis – Daily Chart

The S&P 500 price jumped right after the release of the CPI data, however, the index lost most of its gains yesterday and closed the day just below the 200-day MA (green moving average).

This means that sellers are still active and they are pushing prices lower at every resistance level.

Today will likely be crucial for the market as it might set the next direction for the short term.

As mentioned, the FED decision today will move markets in any direction.

If the S&P 500 price is able to break and stay above the 4100 level, it would be a positive sign that will likely push prices higher in the upcoming days.

Otherwise, if the price gets rejected at the resistances, we can expect a retest of the support at 3900.

If that support will not hold, prices will fall to the 50-day MA (red moving average).

The RSI stands at 56, indicating a bullish trend.

Sentiment Indicator – Fear & Greed Index



The market sentiment is at 61 in the “Greed” mode which is higher than the level registered one week ago.

FedWatch Tool – FED rates probabilities

79.4% of investors are expecting the FED to increase the interest rates by 0.50% today.

The remaining 20.6% are expecting a 0.75% rate increase.

The data show us that the number of investors expecting an increase of 0.50% is higher than in the previous days.

The next FED meeting is today.

Portfolio Update

My portfolio allocation remains unchanged at the moment.

Overall, the majority of my positions are bullish (LONG).

I have a few short positions opened recently that I am monitoring and waiting for the right time to close or I could add more shorts if the price reverts to the downside.

Right now I am neutral on the stock market, as the price can go in any direction in the short term.

I am keeping my risk score low and I have some cash available on balance to use for new trades.

If you are already copying my portfolio, please keep the copy open.

If you are thinking of copying me, now could be the right time, if you can invest for the long term (years).

Remember to copy the open trades to optimize the copy.

Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.

Thank you, everyone. Have a nice day!

Steps to follow to copy my portfolio automatically:

1. Create an eToro account here: https://federicamontella.com/go/etoro/

2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)

3. Go to my profile page: https://federicamontella.com/go/etoro-passionforprofit/

4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)

5. Enjoy, it’s all automatic. You will make passive income 24/7

Let me know if you have any questions.

 

Federica Montella

eToro Popular Investor

 

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Author: Federica Montella
eToro Popular Investor, food lover and blogger. Stock trader and Popular Investor at eToro. I am on a mission to find the best restaurants and food to eat.