Gearing Up for the Fed | A Nasty Gap Down

Zillow stock is getting buried ahead of the open, while the Fed is on tap.

The Fed will be the focus of the market on Wednesday, which is why it has us taking a back seat to the action. As much as I (and every other trader) wishes each day was full of A+ setups for our respective styles, it simply doesn’t work like that in reality.

Like I wrote on the About page for Future Blue Chips, “we’re not trying to force anything and sometimes ‘sitting on our hands’ is the game plan for the day.”

There will probably be some decent trading opportunities off the open, but once the market “settles in” ahead of the Fed, it can become rangebound and choppy. Most of the action will be after the 2 p.m. Fed announcement and ensuing press conference at 2:30 ET.

For what it’s worth, the expectation is for no rate hike, but tapering, inflation and asset prices are all among likely talking points.

Here’s our approach to the market with the Fed in sight, and one trade setup off a nasty gap-down open.