Bulls' last stand?
Daily Plan 8.17.23
So, a dramatic session today brings us to an extremely key area which was shared in my weekly plan over the weekend.
This was an extremely choppy and extremely high volume session punctuated by good 2 way trading ranges until that break in last one hour.
In short this was a very good day for any one with intraday time frames.
Other names like TSLA also saw good sell off (again) and stopped within a walking distance to 210 target with that close around 225 today.
With respect to the FOMC statement today, nothing came as a surprise to me personally. I had anticipated this FOMC statement and I will not be going into detail but I will share where I disagree with Powell.
The FED is saying they still see upside risks to the inflation picture. Which I agree. But where we disagree on is what you do about it? Do you continue to ratchet up rates or do you address this thru an aggressive cut in the balance sheet?
The minutes seem to leave a door open to further rate hikes but I do not think it is going to happen. In my view, whatever Powell and company have done so far have had little impact on slowing down the growth. Inflation again seems to have perked up, in fact. latest data from UK today and Canada seems to point in that direction in several other countries, not just the US.
The main casualty of all these rate hikes is the day to day American who now is taking on record high credit card debts, who is buying home prices at generationally high prices at generationally high payments due to high mortgage APR. Keeping rates high and talking about even more rate hikes I think is irresponsible and what the FED should be instead doing is to aggressively cut the assets on its balance sheet.
They will not do that as that impacts their buddies in high places. They will rather ratchet up the interest rates which impact the average American the most.
Image: Somber looking Powell. Via Time.
Long term effects of these rate hikes I think will be very detrimental to the health of the average American. This is not apparent right now but it will get clearer as we begin to see an uptick in unemployment. This could have wide ranging impact on housing to auto loans to credit card delinquencies to everything in between.
My levels for tomorrow
No one who owns stocks long term likes these periods of sell offs, however believe it or not, this is a garden variety sell off unless one thing happens. The volatility so far, in this move down all the way to 4420 today has been quite muted. This is not at all very high volatility. IV rank is still very muted around 20% which shows relatively low volatility compared to longer term trend.