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3 Trades To Watch Ahead Of Wednesday’s FOMC Announcement


This is a big week in the market with yet another FOMC meeting taking place on Wednesday where Fed Chair Powell could announce a pause to rate hikes… or continue the Fed’s hawkish view and look to raise another half a percentage point. One thing is for sure on that front with the slight up tick in inflation over the past month, rate cuts are still a long way off.

After Friday’s trading session, there is still a pretty strong bearish bias gripping the market and with FOMC coming, there could be some consolidation until the Fed makes its next move. For now, we also maintain our bearish bias as there has yet to be a real bullish catalyst that would suggest any more moves higher.

As for the SPX, we are nearing a previous reject level, so be sure to keep that on your radar as we look to start another week of trading. However, despite all the dark clouds hovering over the market currently, we still have some ETF plays we are going to keep on watch. Just remember that FOMC meetings tend to create some volatility in the markets.

For our long plays on watch this week, we have two we are watching closely as the rest of the market signals more weakness brought about the sluggish performance of the tech sector. First, the XLU is on watch as it approaches support around the 64 area.

Seeing as how utilities is an area of the market that performs better during a bearish trend in the overall market, this is more of an ideal play for longs. Following along the same logic and since OPEC+ nations have signaled a prolonged period of production cuts, thus leading to higher oil prices in the near term, we are also keeping a long play on XOP on watch.

If oil continues to be strong, we are looking at the 150 mark on XOP in order to go long once again. As for short plays, our old favorite TLT is showing us some signs once again that prices may be looking to sink a little further. TLT at around its 52-week low of 92.5 to be specific. A break below of this mark is the signal we are looking for to go short.

Again, this week looks to be a pretty eventful week, but remember, only take A+ setups and do not get suckered into to any false breakouts to the upside as the trend is looking to be lower, or at the very least the market may consolidate until Wednesday when we get more direction from the upcoming Fed announcement. Capital preservation is king…

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Good Luck With Your Trading!

Christian Tharp, CMT

Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group. My Chartered Market Technician (CMT) designation substantiates me as an expert in areas such as the technical analysis of stock trends, market indicators, cycles, price patterns, Elliot Wave principles, Candlestick charting, analyzing financial trends and behaviors, portfolio strategies, and forecasting future price movements. With my straightforward approach to simple, systematic trading, students learn how to strategically assess buy signals and market entry timing, establishment and management of stop losses, and how to employ a simple and disciplined trading approach that creates profits.

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