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I’ve been watching something interesting unfold in the market this week, and it’s got me thinking about what’s coming Wednesday when the Fed makes its move.
The CNN Fear & Greed Index has been all over the place.
It ticked up a bit — we weren’t quite in extreme fear territory — and then we were.
Then we got a big sell-off…
It looked like everyone piled in when they saw the markets recovering, then got washed out just as fast.
At the same time, certain pockets of the market have been showing strength in ways that don’t quite match the broader mood. Companies like Citigroup (C) and Gap (GPS) have been moving higher, which tells me traders are leaning into selective opportunities instead of broad risk. That kind of divergence usually happens right before a major macro event.
The Pre-Rate Cut Trade
I think we probably pump again tomorrow ahead of rate cuts. That’s the pattern I’m playing.
When everyone knows a cut is coming — and they probably will cut — you tend to see a relief rally into the decision, even if the market doesn’t believe the move fixes anything.
But rate cuts aren’t the only force in play here…
There are political dynamics swirling around the Fed right now that could influence tone and timing. Fed Chair Jerome Powell has every incentive to avoid being seen as helping certain political outcomes, and that pressure can bleed into how aggressively the Fed moves.
Markets feel that uncertainty, and it adds another layer to the volatility we keep seeing.
That’s why I’m still holding positions like Apple (AAPL) right now. I’m holding until tomorrow specifically based on this pre-rate cut pump thesis.
The key is I’m not planning to stay for what comes after. Bonds are signaling skepticism, and when fixed income isn’t buying the story, equity rallies rarely stick.
My Exit Plan
By Wednesday, I’m planning exit strategies around that time frame for my Friday expirations. I want to catch the move into the decision, then step aside before the sell-the-news crowd hits.
The part most people overlook is that the market often reacts more to what the Fed chair says than what the Fed actually does. The entire setup may depend on how Powell frames the cut, the outlook, and the path ahead during the press conference.
If he sounds cautious or political or even slightly less supportive than expected, that alone could unwind any pre-cut rally in minutes.
Could I be wrong? Sure.
It would be amazing if they don’t cut, just for pure entertainment value — everybody would lose their mind. But that’s not the likely scenario.
The more likely move is a pump before the announcement, hesitation during the press conference, and a market trying to figure out what comes next.
To better trading,
Alex Reid
WealthPin
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