The markets gave back all of yesterday’s gains, as investors try and digest the latest Fed move. Yesterday, the FOMC increased interest rates by 25 basis points, which sent the markets higher into the close; however, today’s action paints a very different picture.
An interest rate hike has been in the works for some time and was almost expected. However, being this late in the year leaves little time for investors to take action. We have been noticing a whole lot of volatility over the last few weeks and these last two days have definitely followed suit.
We should expect volatility to continue as the markets try and decide where to go next. An interest rate hike usually has a short-term negative effect on the equity markets, but stay mindful of overall support levels – until they are broken, we are still range-bound. Once volatility subsides, we should see more of a directional market and, with the holiday approaching, we should see a decrease in volume.
Tomorrow is December’s expiration, the last monthly expiration of 2015. Follow your plan and make sure to address your December positions. Tomorrow would be a good day to just sit back and watch, given the market's current level and reaction to the Fed’s move.
Have a great night,
Maverick Trading
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