September 19th, 2024

Day 2: Let the cutting cycle begin. The day after the FOMC meeting is when the market typically reacts to what happened on Day 1. The reaction now is clearly bullish, likely because, as the dust has settled after yesterday, the cutting cycle has begun. Many believe this cycle is bullish for the market, following a period where rate hikes were also bullish. As a technical trader, not a macro one, I’ll use the words of my late Italian grandfather, I’mma so confused.

At the end of the day, I don’t care why the market rallied overnight; the truth is it rallied. Now we have to figure out how to trade it.

What I see right now as the best trade out there is to continue to buy RTY on the dips. The catch-up trade is likely where the opportunity is now. RTY should see the most benefits from rate cuts, and many would argue they don’t see the benefits until the cuts come. Now that the cycle has begun, I see the algos being turned on for that market to run, Forrest, run.

As a day and swing trader, my focus will be on RTY right now. I don’t think that ES and NQ will be as clean and have the follow-through that RTY does.

How do day traders using short-term strategies benefit from this market environment?

If you trade multiple indexes, focus on the long setups in RTY. They are likely to have a higher probability of working out here over ES and NQ.

I still think that with tomorrow being an OPEX and Day 3 following FOMC, a lot can still happen, and we will learn more about this market environment following tomorrow’s close.

Keep it light and tight.

Cheers,
DELI