As you well know, Wednesday is the 6th (of 8th) FOMC Meeting of 2025, and it’s a widely anticipated one, since Powell has all but declared a rate cut is guaranteed, and the only unknown is whether the (meaningless) cut will be 25 or 50 basis points.
For months now, equity markets have been stomping higher on a near-daily basis. The trend is utterly bullish, and only a failure of the trendlines shown below would indicate even a whiff of a trend reversal.
Not all indexes are constructed identically, of course. The small caps, for example, have spent years banging around a huge range (which itself is divided into two ranges). We experienced an enormous “V” bottom back on April 7th, and we’re close to lifetime highs at this point. If the rate cut on Wednesday is welcomed with maniacal frenzy, we could well see the Russell finally conquer its lifetime highs after many failed attempts.
I’m keeping things fairly conservative. Although having 20 short positions sounds “pedal to the metal”, in reality they are small positions, and collectively represent about a 70% commitment level (whereas truly max’d out is like 180%). For example, the absolutely goofy heights of the gold index has compelled me to short both GLD and GDX.
To be precise, of the 20 short positions, 19 of them are actual honest-to-goodness shorts, whereas one of them is a bearish options position (specifically, October $460 DIA puts). The Dow Industrials are looking a little bit wobbly, having already breached their short-term breakout level.
It’s always a relief to get these FOMC events into the rearview mirror, but particularly this time, since there is so much tension and potential energy around it. Frankly there’s very little else to say until 2 p.m. EST Wednesday afternoon, so with that, I’ll say good night and good luck.
