Day Trading FOMC Volatility | September 17 2015

Day Trading FOMC VolatilityTraders love volatility

It’s how we make money. Or is it?

To be a profitable day trader we need a stocks direction to be obvious, but we don’t need crazy swings. It’s one of the most misunderstood aspects of trading. Sure it’s exciting to watch. There will be plenty of rookies day trading FOMC volatility this afternoon and they will be guessing. And they will lose money.

They will lose money because they don’t have an edge. They will buy the spike higher and watch it trade lower. They will short the second move lower and watch it spike higher.

Once this nonsense is over, then you can jump in with conviction. If the trend into the close, let’s say from 2:45-4pm is clear, you then have the odds with you for a nice trend day tomorrow in the same direction.

Let those who trade for action and excitement do their thing so they have a war story to tell at Bobby Vans.

Me? I will let the dust settle and then hop on board. I get enough excitement watching the Mets.

Stock Market Today: Map of the S&P 500

(click the map for a full view)

Day Trading FOMC Volatility

Day Trading Game Plan: The SPY ETF Chart

SPY pre market price action hovering at @$200 prior to the FOMC day of trading. After 3 well-bid days of higher-highs and higher-lows the next bullish target is $204.39.

(click the chart for a full view)

Day Trading FOMC Volatility

Stocks to Trade | Thursday September 17, 2015

Pete’s Notes:

  • FOMC day. I will not be trading the afternoon. I personally do not feel there is an edge to take risk.
  • The list of stocks that are having a bullish 5 day run is quite large today. Is the market tipping it’s hand?

Charts in Focus

Western Digital Corporation WDC

Inside days are one of my most reliable patterns. The WDC daily chart had 3 in a row and now 5 doji candlesticks in a row. Not calling direction here but calling for a trend day.

(click the chart for a full view)

wdc


Day Trading FOMC Volatility


Earnings in play today > 1M avg shares:

Stocks that showed relative Weakness– contra to the SPY positive change from the open on 9/16/15: vlo, mpc, fdx, amba, myl, hfc, tso, avgo, mjn, exr, dri, wpz, xpo, cyh, pbf, data, qrvo, scty, wnr, mwe, vrtx, bmrn, srpt, espr, kite

Above the 20sma, up for the week and closed 2% higher from the open: (not necessarily all longs, but stocks to note for the price action of strong close from the open and above the 20sma): BABA, TAP, JD, HAL, COP, FIT, BMY, APA, SLB, NBL, UA, UNP, EXPE, NFX, CTRP, BIDU, APC, TSLA, DVN, EOG, LYB, RRC, CAM, SNDK, GMCR, BHI, CXO, PXD, URI, QUNR, DLPH, SM, PX, KMX, FSLR, SINA, HSY, ECL, CRZO, VRX, FANG, PDCE, OII, XEC, FNV, SKX, APD, FOSL, ATHM, BURL, HAR, YY

Bullish Ideas ATR/Volume/Price: CAM, LB, AVGO, TSLA, UA, LLY, NKE

Bearish Ideas ATR/Volume/Price: gpro, amba, qihu, cybr, wynn, lng, lulu, mpc, wmb, feye, cf, dltr, de, mon, myl, grvo, ,jn, amt, nee, dg, hp, stt, ace, oxy,

Weak Stock Weak Close: amba, ctl, grub, lvlt, mjn, mpc, myl, qrvo, wpz

Strong Stock Weak Close: AVGO

Weak Stock Strong Close: gpro, qihu, wynn, lulu, wmb, terp, dltr, mur, clr, epd, hp, hes

Strong Stock Strong Close: CAM, ATVI, TSLA, UA,

20 day Breakdown: cpgx

20 Day Breakout: ATVI, BBY, BHP, BIIB, CCL, CHS, CTRP, DLPH, TRI, GLW, HTZ, JBL, JBLU, KHC, LRCX, LYB, MAT, NFX, NCR, NKE, NTAP, P, RDC, RIG, SFM, TER, TSLA, UA, URI, VIAB

2x Normal Volume: HPQ, ASNA, AEO, NAVU, UA

Watch List Longs: BBY, MO, BRCM, AKAM

Watch List Short: abt, amgn, wmt, wynn, nue, dd, qcom, m

Inside days: gps, syy, ups, psx, wm, adsk, mar, vz, gild, kr, cvs, adi, bbt, cfg, wba, bx, hot, bkd, googl, goog, bax

Day Trading FOMC Volatility | September 17 2015

Best Way to Trade the FOMC Rate Decision

The best way to trade the September FOMC rate decision and any major event with this much uncertainty and division is to wait.  There is no question that this month’s monetary policy announcement will trigger a significant increase in volatility that will translate into large swings for currencies.

In addition to the central bank’s decision on interest rates, Janet Yellen’s guidance will also have a major impact on the market’s appetite for U.S. dollars.

Most investment houses are focusing on the scenarios post FOMC and not on positions that should be taken going into the announcement because everyone from economists to investors and even policymakers are split on the action that the Federal Reserve should take.   According to the latest Bloomberg survey, 50% of economists polled are calling for a rate hike and 50% predict no change in monetary policy.

Yet considering that Fed Fund futures are pricing in 72% chance of no rate hike, the big surprise tomorrow will be a 25bp increase.  Unfortunately trading the September FOMC rate decision is not a simple binary bet of hike vs. no hike. At this meeting, the Federal Reserve will also release its economic projections alongside the rate decision, which will be followed by a press conference from Janet Yellen.

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About the Author

Pete is a full-time trader and mentor since 2000. Author of Equity Trader 101 and the Order Flow Method. He is dedicated to help self-directed traders to bust through the six-figure level.

Leave a Reply 2 comments

bob Reply

,Again Pete very good advice on these borderline gambling days ,not trading sensibly with a plan.,recipe for an unnecessary loss of principal. AKA-a disaster for a trader.Go spend time with family , your kid to school, help the wife or just go for a nice walk…

    Pete Renzulli Reply

    Hey Bob,
    Golfing would have been a lot better investment today!
    Have a great night.
    Pete

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