SPY, SQQQ, TQQQ, JNUG, JDST, NUGT, DUST – FOMC Meeting (Interest Rate Decision, Fed Chairman Speech)

The day the Fed releases the interest rate decision is usually incredibly consequential, but not in a predictable way.  The best thing to do is think about it as a pendulum.  Pushing the market towards reacting bullishly are things like:

1. The Fed Chairman talks about how strong the economy is during his speech, highlighting things like no need to raise interest rates.
2. The Fed Chairman highlights a drop in inflation threats (for 2023 at least)
3. The Fed notes that the jobs market is strong despite the higher interest rates and lower inflation.

The Fed decision on interest rates will also affect Gold and Silver prices.  If the decision is to drop interest rates or in the case of 2023, to NOT raise interest rates at all, the dollar would become weaker and right along with that Gold and Silver prices would increase.

HERE’S THE CAVEAT THOUGH: If the market has expectations of any of the things mentioned above, and then those expectations are not met fully, the market could react completely opposite to what one might expect, in the short term.  So being aware of what economists are predicting, what the market has been acting like leading up to the FOMC meeting, being aware of the change in the valuation of the dollar leading up to the FOMC meeting, etc etc. These are all important things that will impact how the market reacts.

Some traders bet on Volatility during this.  For example, a trader might straddle gold or silver calls and puts, and as long as the change in the price of gold and silver pushed either the Puts or Calls over 100%, they’d walk away with a gain.  However, some traders try to get ahead of the FOMC data reaction, and bet on one side.  Other traders completely avoid the days around the FOMC meeting, because the volatility and predictability is so difficult.