How to trade when the Fed lowers rates? | 9.18.24 OVTLYR Trading Room

How to Trade Stocks and Options Podcast with OVTLYR Live

In today’s video, we dive into a Fed Day market analysis, reviewing how traders reacted to the latest announcements and highlighting key opportunities. Trading around major economic events can often feel like a rollercoaster, but today’s market was surprisingly stable, closing only 18 basis points from yesterday. Despite this calm, sharp traders found ways to profit by recognizing the right signals. We begin by analyzing the intraday chart, which showed a volume spike that led to a brief rally, followed by a reversal. For those who managed to catch both moves, it was an excellent opportunity for quick gains. We break down these setups so that even if you missed this trade, you’ll learn how to spot similar opportunities in the future. One standout stock today was Zillow ($Z), which saw a 5% spike. If you were watching the 62-strike options, they doubled in price in under 30 minutes. This kind of move, especially on Fed Day, shows why staying engaged with the market pays off. Next, we dive into the Fed’s decision to cut interest rates by 50 basis points. This signals more rate cuts are likely, impacting inflation and the broader economy. We explore how this news can influence longer-term trades and how the Fed’s projections on inflation and unemployment could shape various industries. Another surprise mover was Lunar ($LUNR), which shot past $8 after weeks of trading between $3 and $5. It wasn’t on our watchlist, but traders who caught this move saw solid returns. This reinforces the value of watching stocks that may not be in the spotlight but have breakout potential. We also discuss how to use the CME FedWatch tool, which tracks rate hike or cut probabilities. On days like today, even slight changes in expectations can move the market significantly, making it a must-have tool for traders. Market breadth was also notable, with 63 stocks making bullish moves despite the calm market close. We show how to use market breadth indicators to stay ahead of trends, even when broader indices remain flat. For those following our "golden ticket" strategy, we covered how to use moving averages like the 10 over 20 to identify trends. While SPY is showing bullish signals, we also discuss how to watch for potential sell signals to manage risk effectively. Finally, we discuss how to manage risk by adjusting position sizes using ATR (Average True Range) and explore how order blocks can help time entries and exits more effectively. If you want to improve your trading and spot new opportunities, check out the full video, where we cover everything from intraday action to macro trends. #FedDay #Zillow #Lunar #StockMarket #TradingStrategy #Volatility Be sure to like and subscribe, and let us know how your trades went today!