March 21st, 2024

Day 2 is the reaction to Day 1. Whenever we have a Fed meeting, I always view it like this; Day 1 tends to be an overreaction, Day 2 is the response to Day 1, and Day 3 reveals if the market overreacted or if the meeting sparked a sustainable trend.

This morning, I don’t believe the markets overreacted to the Fed. The Fed is essentially striving to be dovish without explicitly saying so. Expectations have shifted from 6 rate hikes to 2-3, yet the market continues to climb. This reinforces what I observed at the last Fed meeting – it’s not that the Fed is on the verge of cutting rates, but rather that they are ceasing rate hikes altogether.

While macro traders may delve deeper into this, I, a humble trader, interpret market reactions for guidance. Presently, the market is bullish, and the Fed’s stance is not dampening that sentiment.

How do we approach trading on day 2?

I will be live today on Develop Your Edge at 10:30 AM ET on my YouTube channel to delve further into this topic. https://www.youtube.com/live/jdiWAWT9sq0?si=Jp9qQ2PtBhN-N8TC My focus today will be on riding the wave, not going against it. I’ll be utilizing short-term technical analysis to identify long opportunities, not attempting to time market tops.

Regarding technicals, remember to trade conservatively and be mindful that when ES and NQ are at all-time highs, monitor how the market responds to your levels and trade cautiously. Keep your positions small and precise.

See you at the livestream at 10:30 AM ET.

Cheers, DELI