Stocks Jump as Volatility Dumps Post FOMC

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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Stocks rallied sharply following the Fed announcement, with the VIX collapsing after the event risk was removed. It was a mirror image of what we saw last Tuesday. There was not much that was overly bullish from the Fed, raising their outlook for rates by 60 bps to 90 bps in 2022, while 2023 rose by 60 bps 1.3%. So, that was more hawkish than what Fed Fund Futures were pricing in, with December 2022 at 0.725 bps and 2023 at 1.4% as of today’s close. So the Fed was more hawkish than expected for 2022 and higher than where 2023 before the Fed when they were trading around 1.3%.

S&P 500 (SPY)

But the rally in stocks was purely driven by the move lower in the VIX, as implied volatility levels drop. We see this often these days. It left the S&P 500 trading where it left off on Friday, at 4709.84.

Nasdaq (QQQ)

The Qs rallied more but could not regain as much and remain below crucial resistance at $400.

Apple is a stock that I own, so I am more than happy to see it rise. But the stock managed to retrace to resistance at $179.40. So we can see what happens tomorrow there.


That’s all for today.


Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future results.