How To "Cash In" On The Fed's Next Move
The Fed’s aggressive rate hikes have killed stocks over the last year.
There’s no fundamental reason to expect any changes from them though.
But you don’t have to pay for it though.
You just have to identify the critical trends and use them to your advantage.
Case in point - the market rally and Fed meeting are creating a potentially staggering opportunity.
And JP Morgan agrees.
Here’s the setup.
A Pattern Makes Profits
JP Morgan’s trading analysts have laid out a potential scenario that could give the current rally another jolt of energy.
They published research that says if inflation starts to fall, stocks could rise anywhere from 2% to 10%.
From Dow 34,000, that’s a big move just shy of new all-time highs.
But the Fed could – and likely will - ensure the rally won’t continue for long.
Consider the trend.
Back in June the Dow was above 33,000.
That month the Fed announced another 0.75% rate hike.
The Dow went on to fall 9% from there.
By August the Dow completely recovered to 34,000.
The Fed met again in August and made another 0.75% rate hike.
Stocks took an immediate turn for the worse.
The Dow went on to fall to under 29,000.
It was another Fed-driven drop. And it ended in a 16% decline.
Same pattern, same results.
Today stocks have fully recovered again.
The Dow broke through 34,000 this month.
But the Fed is meeting again and expected to make another sizable rate hike.
So what’s the trade?
Anatomy Of A Great Trade
The trade set up is:
1. The Fed signals it’s going to lighten up on the brakes
2. Stocks continue to rally another 5%-10% while the fundamentals continue to deteriorate.
3. Cash up and get ready to bet against stocks or sit on the sidelines.
Cashing out now and betting against stocks may certainly be a “good” trade.
But this rally is strong and any positive Fed signals could keep it going.
If it does, it will set up a “great” trade.
And if you wait for great trades, you’ll be in great shape for the next big market swing.
