End Of Day Post

The Fed kept interest rates unchanged, referencing low inflation and wanting to see further improvement in the labor markets. The initial reaction to the statement was to the upside, as the markets shot higher from an already bullish start to the day. The markets did turn lower, with the classic "overreaction...then second reaction" market behavior, closing on the lows of the session. Both the S&P and INDU closed in the red with the Nasdaq up, but only by 5 points or 0.10%.

There was a bearish tone in today's close; however, tomorrow's action will be key to see if that is indeed the case. The "non-action" from the Fed carries with it an argument for both a bullish and bearish outlook. Bullish in that money is still inexpensive to borrow and should allow for more growth in the short-term. Bearish in that the Fed still sees instability in the markets, and raising rates now could cause problems moving forward. Either way, today's move doesn't shed much light on where we go from here.

Tomorrow is option expiration for September. Earlier today, we were preparing for a volatile end to the month. In light of today's reaction to the Fed statement, though, we might not see as much as earlier anticipated. However tomorrow plays out, make sure that you address your September positions. Give yourself the morning to see what happens after today's event is fully digested by investors. We could see a big move, or none at all, so best to prepare for either.

Mid-Week Outlook:

• Bull: 25%
• Sideways: 20%
• Bear: 55%

Have a great night,

Maverick Trading