Market views and operational suggestions on September 18

Let's talk about the most critical topic in the market now. Today I will interpret the deep logic of the Fed's interest rate cut.

1. The most core reference for the Fed's interest rate cut.

Will the market cut 25bps or 50bps? Many people use non-agricultural data as an indicator. The US dollar index, the intensity of interest rate cuts, and the US stock market are closely related. In fact, the US dollar index should be used as an indicator to judge the behavior of the Fed.

The US dollar index has a long-term support of $100.8. Remember this number. If the US dollar index falls below this line, it will weaken the intensity and effect of the Fed's interest rate cut. Therefore, in order not to weaken the intensity and effect of the interest rate cut, Wall Street must maintain the stability of the US dollar index.

If it falls below $100.8, such as $100.550, Wall Street will start to smash the market. Because the crash of US stocks will definitely affect the world. When US stocks cause fear in global stock markets, money will flow back; so the US dollar index immediately rebounded, exceeding the $100.8 line and reaching $101, and then the market stabilized.

Because there is a downward trend of the US dollar, Wall Street has to crash the market and make the US dollar flow back through the crash, so as to maintain the stability of the US dollar. At the same time, by crashing the market, a crisis is created and the Federal Reserve cuts interest rates.

2 How many bps will the interest rate be cut this time

How much the Federal Reserve will cut this time depends on the trend of the US dollar. If the US dollar falls a lot, Wall Street will fall sharply and cause stock market panic, so the Federal Reserve will urgently rescue the market, so it will have to cut 50bps.

If the US dollar does not fall below, Wall Street does not need to rescue the market, and stocks do not need to fall sharply. There is no big panic, so the Federal Reserve will cut 25bps.

Under normal circumstances, this time it should be a one-code cut; but the specific amount, we have to refer to the trend of the US dollar index before it cuts interest rates.

3. Economic data are all for the election

Yesterday, U.S. retail sales unexpectedly rose in August, suggesting that the U.S. economy remained on a solid footing for most of the third quarter. Data showed that U.S. retail sales rose 0.1% month-on-month in August, following the upward revision of 1.1% in July.

This data is worth pondering. The expectation was a negative growth of 0.4%, but it just grew by 0.1% month-on-month. I think the Fed may try not to cut interest rates by 50 basis points at one time.

In the current U.S., only if the economy performs strongly can the Fed find a reason to cut interest rates by 25 basis points. Otherwise, according to market expectations, the Fed must cut interest rates by 50 basis points. Remember, all economic data are for the election.

4. Today is the delivery date of Vix futures.

On the delivery date of Vix futures, the probability of a sharp drop on this day is generally quite high. Now the index has risen for 7 consecutive days. I think the put should be lost. Then the institution may start to arrange the put that expires next month on the delivery date of the futures. Once there is bad news today, it will inevitably be a unilateral waterfall plunge.

Because I have always predicted that the trend around September 18 will be the opposite. So, here I will directly give my prediction for today's market, which is a plunge of more than 2%.

This is just a prediction, but it is not necessarily correct. If there is no plunge tonight, don't be surprised. Predicting the rise and fall of the index is more difficult than analyzing stocks.

The purpose of prediction is to deal with various possibilities. Before the market comes out, no one knows the final answer.

Therefore, prediction can only rely on trading experience. There is also your interpretation of key events, and everyone interprets the same thing from a different angle.

Yesterday, I shared event-driven trading, NVDA and WDAY. This is a short-term transaction of mine, not a long-term trading plan.

1. What is the logic of event-driven trading?

Everyone knows that I shared earnings stocks (ORCL, PATH) some time ago, and PLTR is expected to enter the S&P, which are all event-driven strategies.

Generally, buy before the market closes at 4 o'clock, waiting for the announcement of good news after the market to trigger a rise in stock prices. This strategy is safe and low-cost investment.

Yesterday's event-driven trading logic NVDA, the result did not enter the Dow Jones, I also said that if it did not enter the Dow Jones, it would be sold directly after the market, so there would be no profit or loss.

NVDA is exploring the AI ​​application ecosystem, and the important news of NVDA's cooperation with CRM did not cause volatility and rise after the market, which shows that the bulls are quite cautious at the current position and do not want to continue to hype, which is why I want to sell NVDA.

Some friends think that such a strategy has no income or very little income. My event-driven trading requirement is not to lose money, but only to make a small profit. I am completely satisfied with such a result. If you can make 2% every week, if this accumulates into a lot, the income will be quite generous that year.

2. How much the Federal Reserve cuts interest rates, I am actually not very concerned, after all, I have my own trading plan, "surge before September 18, bearish after September 18, plummet on September 18, and bottom-fish after September 18", this is the trading plan I have already made before, so there will be no change.