48 Hours Until Meltdown?

We’ll know on Wednesday [The Fastest Profits We’ve Ever Seen]( See how Kenny Glick ignores market catastrophes to hunt outsized homeruns like 650% in one day, 700% in 6 hours, & a once-in-a-lifetime 2400% in 4 hours.](   48 Hours Until Meltdown? By Matthew Carr, Editor, Tactical Trend Investor Hey Reader, There are only 48 hours until the biggest catalyst of the week. Will it trigger a meltdown? Or spark a launch higher? I’m going to tell you the answer right now… On Wednesday, Federal Reserve Chairman Jerome Powell will once again take to his podium. Now, I yearn for the days when we could just tune good ol’ JPow out. And those days will return. But for now, we’re held hostage by the Fed’s latest rate hike decision – as well as the logic behind it – that’ll come tumbling out of his mouth. So, like it or not, Fed Day is here. Over the past 15 months, the market reaction to Powell’s speech could make or break your week, depending on how you were positioned. But during this span, it’s become one of my favorite monthly catalysts to cover and trade. Because regardless of the size of the rate hike, Fed Day has consistently delivered one thing: earth-rattling moves. So, sit up and pay attention… Here’s how to make it your most profitable week yet.   of a $50 Billion Oil Deal…]( just triggered a massive acquisition race in the Permian basin… with 400 tiny companies in the region and $7.2 TRILLION gallons of gas, this will easily be the biggest and fastest land race in American History. Anyone who knows the acquisition targets is about to experience a massive payday… Join Garrett {NAME} for the full briefing, including targets, dates, and deal sizes. MORE HERE.](   Size Does Matter I like big moves… I cannot lie. As we approach Fed Days, the conversation often veers to targeting the SPDR S&P 500 ETF (NYSE: SPY) or the iShares Russell 2000 ETF (NYSE: IWM) for gains on any moves the market makes after Powell speaks on Wednesday. But neither of those are my vehicle of choice. That’s because tech stocks are the most vulnerable to interest rate moves. This makes them ideal for tapping into market sentiment – or simply trading – rate-centric catalysts. Over the last 11 official and “unofficial” Federal Open Market Committee (FOMC) announcements and Jay Powell press conferences, the Invesco QQQ ETF (Nasdaq: QQQ) has posted one-day moves greater than 2%... seven times! That translates into a 63.6% chance tech stocks scream higher or crater lower on rate hike announcements. And there’s almost an even split in terms of response: five up, six down. On top of that, our average +/- one-day QQQ move on Fed Day is a hefty 2.5%. For comparison, that’s greater than the 1.87% average +/- one-day move of the SPY and the 2.2% average +/- of the IWM. I’ll take this opportunity to fling a few other key numbers your way… The SPY has had only 5 one-day moves greater than 2% on Fed Day, while the IWM has had 6. So, it’s straightforward… the action on the QQQ is more pronounced. Though, not as pronounced as the ProShares Ultra VIX Short-Term Futures ETF (UVXY) or the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) – but there’s no clear trend with either of those. Now, I say official and “unofficial” Fed Days for a reason… Powell’s annual remarks at the Kansas City Fed’s Jackson Hole Economic Symposium in August make it an “unofficial” Fed Day because there’s no FOMC meeting that month. Yet that’s been a real market mover. From the chart above, you can see that from Jackson Hole through December, the Qs tanked on Powell’s comments. Part of the reason is because the U.S. central bank was stepping on the gas. It was raising rates 75 bps in September and November, with another 50 bps in December. And rates had been cranked up to their highest level since 2007. However, we can see pessimism’s grip is starting to weaken. That’s a positive. The Fed slowed the pace of hikes to 25 bps in February and March. And we’re pretty much guaranteed another 25 bps increase this week. That’s something I think investors will accept… though not enthusiastically. So will we see a meltdown or melt up on Wednesday? Knowledge Trumps Fear There’s a market maxim, “Don’t fight the Fed… Fear it.” And there’s plenty of reason to fear the U.S. Central bank right now. Especially for tech stocks during a rate-hike cycle. But my approach is about creating understanding and recognizing how markets react to events like these. I’ve built a catalog of tactical trend catalysts over the years. And I’ve covered the market reaction in-depth to Consumer Price Index, Producer Price Index, and non-farm payroll releases for months. All of these have triggered enormous one-day moves over the last 15 months. But none of them compares to Fed Day. May’s FOMC meeting is mere hours away. The fireworks will really begin at 2:30 p.m. ET on Wednesday as Powell grabs the mic. That’s why Kenny Glick and Garrett {NAME} will be Trading the Fed live from 1:45 p.m. to 2:45 p.m. ET. To take advantage of initial market reactions, trade along with them.[Use this link to add a reminder to your calendar so you don’t miss out.]( The event is free to watch. Beyond that, prepare now for a move of about 2.5% up or down. That’s the established trend. And right now, with four regional bank failures in two months - the latest being First Republic - and a pause in rate hikes on the table for June, I expect we’ll see markets pop to the upside. In other words, I expect Powell’s commentary will trigger a sigh of relief. There’s a variety of ways you can play this… an at-the-money straddle or strangle, as well as just calls. I tend to lean toward the former because the move isn’t absolute, there’s volatility. So, I like to use a straddle or strangle and sell the leg that corresponds to the first reaction. For example, a long red candle out of the gate at 2:30, unload the puts for gains and hold the calls for the rebound. We’re one step closer to being nearer to the end of this rate hike cycle. That’s something I believe investors should cheer… and potentially profit from. Your tactical trends hunter, Matthew P.S. This bears repeating: Kenny Glick, the VWAPian Warlock, and Garrett {NAME}, Editorial Director of Money Morning, will be trading the Fed live on Wednesday from 1:45 p.m. to 2:45 p.m. ET. These sessions are always exciting and often profitable. [Add the event to your calendar so you don’t miss out.](   [My Weekly Trade Appointment]( Where will you be on Wednesday at 2:30? I’ll be right here. 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