We Want A Bearish Reaction To the FOMC

There will still be a few bullish weeks ahead. I am not overly concerned with a big drop until I see a buying climax. Here's what to watch for.

PRE-OPEN MARKET COMMENTS FED-DAY – Traders will be scrutinizing today’s Fed statement. In particular they will be looking for any hint that they might pause in September. That would be very bullish. Employment is strong, wages have been ticking higher, the bank stress tests showed that balance sheets can withstand a recession, core inflation is very stubborn and the market is at a 52-week high. I do NOT feel that the Fed is going to raise false hope by suggesting that a pause is possible in September. They are going to keep the rhetoric hawkish so that they can tame inflation. In their own words, “they got inflation wrong last year and they will not make that mistake again”. Most Fed officials believe that there will still be one more rate hike after today in 2023.

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