OVERVIEW
The Anticipation Keeps Building

The anticipation around tomorrow’s rate cut decision is intense—you could cut the tension with a knife. As of yesterday, the market was pricing in a 63% chance of a larger-than-expected 50 basis point cut, up from just 30% a week ago. Meanwhile, the odds of a more modest 25 basis point cut sit at 37%.

This kind of buildup isn’t new, but it’s a reminder that when markets are heavily influenced by policy expectations, they’re ripe for volatility. It’s not just the rate cut itself that has everyone on edge—it’s also the wording and tone that Fed Chair Jerome Powell will use in tomorrow's session. Whether he signals a more cautious or aggressive stance could easily spark a wave of market reactions. Powell’s phrasing will be dissected for clues, and any perceived shift in the Fed’s direction could trigger a significant repricing in the market.

So, while it’s tempting to get caught up in the idea of a bullish rally driven by rate cuts, it’s crucial to stay grounded. There’s a good chance we’ll see just as much volatility if the market feels Powell’s comments are less dovish than expected.

Volatility often gets a bad rap, as though it’s something to fear. But as traders, we should remember that volatility is what drives the market and creates opportunity. Without it, prices wouldn’t move, and there would be no momentum for us to trade. The real challenge isn’t volatility itself—it’s when it moves in the wrong direction relative to where we’ve positioned ourselves. That’s when it can sting.

But here’s the thing: instead of fearing volatility, we should embrace it while managing our risk. In moments like these, when uncertainty is high, the key is staying adaptable and making sure you’ve got a plan in place. Maybe that means reducing your position size or waiting for clearer signals before jumping into a trade. It’s not about avoiding the market, but about being smart in how you approach it.

The real danger in these uncertain moments is letting fear or impatience drive your decisions. Stay calm, manage your risk (lower your exposure if needed), and let the market come to you. You’re not late to the party just because you’re being cautious. As swing traders, we’re 99% risk managers—control that, and the profits will follow.

So, what does all of this mean for today’s session?

There are definitely setups out there that look promising right now, but whether you should take the risk of buying into them ahead of tomorrow's Fed rate decision is another question. To put it bluntly—it’s a gamble.

Being patient and waiting for the dust to settle after the decision could save you from unnecessary risk. It’s better to miss out on a small gain than to jump in too soon and take a big hit. Remember that tomorrow’s move might create even better opportunities down the road. There’s no rush—you’re not missing out if you play it safe.

Nasdaq

The Nasdaq has seen a noticeable drop in volume over the past few sessions, hitting the Point of Control (POC) level around $474. So far, it’s been rejected at this zone, which isn’t surprising given how much overhead supply exists here. The Visible Range Volume Profile (VRVP) highlights just how dense the volume pocket is between $474 and $485, making it tough for the QQQ to break out without something significant driving it.

And what do you know? Tomorrow's Fed rate decision could be exactly that catalyst. The market is clearly waiting on it, and with such a pivotal moment looming, it’s no wonder the QQQ is stuck, holding off on any big moves. It feels like everything is building toward that decision—whether Powell’s words are enough to push the QQQ out of its multi-month base and above this tricky POC level remains to be seen.

This is one of those make-or-break moments that could either lead to a breakout or a breakdown before more consolidation, depending on how the market responds.

S&P Midcap 400

The midcaps have been showing exponential strength over the past few sessions, with both price and volume climbing steadily. Yesterday, the Point of Control (POC) at $555 acted as a strong support intraday, allowing the MDY to close just below $560, but it’s still sitting under a heavy supply zone that stretches up to $565.

It wouldn’t be surprising to see some consolidation today, potentially with the MDY pulling back toward that $555 POC level. This kind of consolidation allows the market to reset and lets traders reassess their positions, reducing the risk of an overextended move.

Plus, with a major catalyst like the rate decision on the horizon, it makes sense for things to slow down a bit, giving us a clearer picture of whether midcaps have the strength to push through that dense overhead supply after the news.

It’s evident, though, and important to point out that the midcaps are showing real strength right now. Despite any potential consolidation or pullback, the underlying momentum is there. The steady climb in both price and volume over the last few sessions signals solid demand, and even if we see some cooling off today, it doesn't negate the strength we've observed.

Russell 2000

The small caps are definitely showing signs of indecision heading into tomorrow’s session. Yesterday’s low-volume red doji candle, which formed right at the point of control (POC) level around $217, is a classic signal of market hesitation. After three strong days of upside momentum that pushed the IWM (Russell 2000 ETF) above its key daily moving averages, it seems like momentum is now slowing down as expected.

Given that we’re slightly extended above the 10-EMA, a minor intraday test today or early tomorrow wouldn’t be surprising. However, we don’t anticipate any significant downside movement. The most likely scenario is some sideways chop as the market waits for the Fed’s decision. This kind of consolidation is typical before major events, allowing the market to digest recent gains and prepare for the next move.

DAILY FOCUS
Don’t Try To Outsmart The Market

In periods of high anticipation, such as with tomorrow’s Fed rate decision, it’s natural to feel a pull to predict every market move or try to time the perfect trade. However, overcomplicating your approach or second-guessing yourself can lead to unnecessary stress and poor decision-making. Instead, remember to adhere to your established strategies and focus on risk management.

Going into today’s session, the last thing you want to do is fall into the trap of overtrading. It’s easy to be tempted to place trades simply for the sake of being active or to chase the market’s movements, especially with the heightened anticipation surrounding the Fed’s decision.

Remember, trading isn’t about constantly putting risk into the market; it’s about making thoughtful, strategic decisions. The urge to stay busy or to try to time every move can lead to unnecessary losses and diminish your overall effectiveness. Instead, focus on quality over quantity. Stick to your pre-defined strategy, be selective with your trades, and only take positions that fit your criteria for risk and reward.

Patience and discipline are your best allies. By avoiding the trap of overtrading, you allow yourself to stay focused on high-probability setups and manage risk more effectively. Keep your approach measured, and let the market come to you rather than forcing trades. This mindset will help you navigate today’s session with greater clarity and improve your chances of achieving long-term success.

Here’s why this matters: Small losses are a natural part of trading and shouldn’t be a major concern as long as your overall strategy is sound. What truly counts is your ability to capture outsized rewards when opportunities arise. If you’re consistently positioning yourself where the potential upside greatly outweighs the downside, you’re setting yourself up for long-term success.

WATCHLIST
The Best Looking Setups We See

KINS: Kingstone Companies, Inc

• KINS is a financial stock that has been in the spotlight due to its recent setup over the past few weeks. The stock has been forming a Volatility Contraction Pattern (VCP), a technical setup characterized by tightening price ranges and declining volatility. This pattern is significant as it often precedes a breakout or significant move.

• Recently, KINS experienced a dip below its rising 20-day EMA, but this decline was quickly met with strong buying pressure. This demand drove the stock back into the upper part of its trading range, showcasing the resilience and potential for a future breakout.

• While the financial sector has been lagging recently, it’s noteworthy that several financial stocks, including KINS, are setting up once again. This resurgence could indicate that the sector might be poised for a bounce or breakout, making it an area to watch closely for potential opportunities.

AVAH: Aveanna Healthcare Holdings Inc.

• AVAH, a healthcare stock, has been carving out a sideways trading range as it continues to bounce along its 10- and 20-day EMAs. Over the past three sessions, the stock has displayed a pattern of consolidation, indicating a period of stability and potential for a breakout.

• Although AVAH is slightly less linear in its movement compared to KINS, its current setup is noteworthy. Given the current market environment with mixed signals across various sectors, we’re focusing on identifying as many potential setups as possible.

• AVAH’s sideways action could be setting the stage for a significant move, especially as the healthcare sector is also showing signs of relative strength over the recent week.