Transcript of Get READY: Fed Day has Arrived.
TraderNick
0:00Markets are going to move huge tomorrow.0:01And it basically comes down to one of0:03two scenarios. Either we get a dovish0:05hike from the Federal Reserve, a hawkish0:07hike from the Federal Reserve, or0:09possibly no hike at all. I think this is0:11unlikely at this point, but just to0:13cover our bases here, if that were to0:15happen, we would have massive moves in0:17the market. If you saw no hike, it would0:20likely lead to gold rallying sharply and0:22the dollar falling off. But taking this0:24off the table for just a second, let's0:26talk about which of these two scenarios0:28I think is more likely. Do we get the0:29dovish hike or the hawkish hike? And0:31what do these phrases actually mean?0:34Dovbish just basically means a cautious0:37hike, meaning we'll hike interest rates0:39to kind of check inflation, to respect0:41the bond market, but we don't see a0:44bunch of hikes coming forward. Well, or0:46in the future. And a hawkish hike is0:48kind of the opposite. It's we are hiking0:51with the willingness of more hikes0:52coming behind this because inflation is0:54super super problematic and we think we0:56can keep hiking. Now, you might say,0:58"Well, aren't they just going to speak0:59out of both sides of their mouth? Aren't1:00we going to hear from Kevin Worsh like,1:02"Oh, we might hike, we might not hike,1:04and not really give us any forward1:05guidance." I had someone comment that1:07Kevin Worsh is not a fan of forward1:08guidance, so we're not going to get any.1:10Well, maybe, maybe not. But even if1:12Kevin Walsh says nothing of what he1:15thinks for the future, the dot plot1:17tomorrow will still tell the story. Let1:20me explain. The dot plot is basically1:22scheduled to release its updated uh1:24updated plot tomorrow uh September 16th.1:27It will be published as part of the1:28summary of economic projections at the1:30conclusion of the 2-day Fed meeting1:32followed by Kevin Worsh's press1:34conference. Here's the thing you have to1:35know. The dot plot, if you don't know1:36what that is, it's basically a plot that1:39looks kind of like this t talking about1:41where at different time frames the Fed1:43thinks policy is going to be in terms of1:46interest rates. Effectively, it is1:48forward guidance to the most simple1:50form. And until the Fed chooses to do1:52away with the dot plot, which they've1:54talked about doing, uh this gives us1:56huge insight into where Fed committee1:59voting members think interest rates are2:02going. The Fed dot plot tomorrow is2:04going to be critical because if there is2:07projections on there for more of a2:09dovish hike, and again, this is putting2:11numbers, not just sort of this2:13contextual, you know, could be this,2:15could be that. We're talking about a2:16specific plot that will give us an idea2:18of whether or not this hike is a dovish2:20one, meaning there's a hike and then2:23there is not so many hikes ahead of that2:26or if it is a hike with many projected2:29hikes after it or several more than the2:31market is currently expecting. So what2:33happens in those two scenarios? If you2:35get a hawkish hike tomorrow, let's talk2:37about what that could do. Clearly the2:40dollar's going higher, gold is going2:42lower. I probably get stopped out of my2:43position and I move on to the next idea2:46because I'm not going to stick around.2:47If there is a hawkish hike tomorrow,2:49it's hard to defend. And at that point,2:51then we're probably going to see yields2:52blow out higher. You know, the 2-year2:54yield will continue its march uh the2:5610-year yield continue its march higher.2:58Um the bond market basically selling off3:00and pricing in more inflation. But what3:02about if we get a dovish cut or a dovish3:05hike, I should say. Um well, in that3:07case, stocks would probably rally, gold3:09would rally, everything sort of to the3:11opposite. And we have to think about3:12what is currently priced in. And if you3:15don't know this expression, the idea of3:17something being priced in is that the3:19market has already moved prices around3:21to expect a certain outcome. So if3:24tomorrow you get an interest rate hike,3:26it's not going to surprise very many3:28people. Here I am and many other people3:30saying they're probably going to hike3:31tomorrow. What will move the market is3:34whether they hike rates with projections3:36to hike them much more aggressively3:38further or if there's a hike tomorrow3:40with little anticipation of further3:42hikes to follow. So, now that we've got3:44that cleared out of the way, let me just3:46make a quick reminder that this video is3:48not financial advice. Trading is high3:49risk. Let's talk a little bit about my3:51personal positions and how I'm planning3:53to kind of be positioned for this3:55tomorrow.3:57So, first and foremost, you saw it3:59already, but I am long gold. And I'm4:01holding on loosely to this idea because4:03while when I first bought gold, it was4:06getting a much stronger reading within4:07my trading system, the edgefinder. Let4:09me pull up gold. You can actually see4:11historically speaking, we went from a4:13really bullish score for much of July4:15into August to now more of a neutral4:17reading. This doesn't make me4:19immediately bearish on gold, but from a4:21technical perspective, we really lost4:23kind of our momentum to the upside and4:25we've fizzled out into more of a4:27sideways rangebound market, at least in4:29recent time. Now, why am I getting or4:32why am I not immediately selling out of4:34gold and getting short or anything like4:35that? Well, it's because sentiment,4:37let's just break this down very quickly.4:39Institutions are incredibly bullish on4:42gold. They have been continuously adding4:44more bullish exposure as according to4:46the CFTC's commitment of traders report.4:48We know institutions are very long gold.4:51And here's our coot data history graph4:53showing the commitment of traders data4:55long exposure. Hedge funds,4:57non-commercial big hedge fund, you know,4:59basically the smart money players have5:01continued to build their long exposure5:03in gold. Now, the person who's more5:05skeptical of this chart might say,5:07"Well, yeah, they're 90% long, so5:09they're not going to get much more long5:11than this." Uh, but personally, I use5:13this more of as a trend following tactic5:16rather than trying to revert this5:17because if you had called, you know, oh,5:19institution ownership uh is very high5:21back here at 76%. You know, a year and a5:24half later or whatever, here we are much5:27higher. Institutions have been buying5:28gold aggressively throughout and gold5:31price is much higher than where it was5:32at the beginning of 2025. So for me5:34personally, I'm going to use this more5:35as a trend following indicator and that5:37is how it is programmed within5:38EdgeFinder's asset scorecard. So what we5:41can see here is that score for sentiment5:43on gold is getting positive readings5:44because we have net institutional5:46positioning that is bullish on gold. Net5:48institutional change recently in the5:50latest report that is also bullish. We5:52saw a 1% approximate change to the5:54upside here in terms of positioning5:56there. And then simultaneously we know5:58the crowd sentiment is super bearish.6:00Let me show you. Okay, so what we're6:02looking at is the 5-day moving average6:03applied to the put call ratio. And if6:05you don't know what put call ratio is,6:07don't worry. It's very simple. It is6:08just a ratio in the options market of6:11puts traded versus calls. Puts are6:13bearish bets, calls are bullish bets.6:15All right, with that out of the way,6:16what we see here is that we have seen a6:18lot of puts trading, which that6:21generally tells you that crowd sentiment6:22is a little bit more pessimistic on gold6:25in accordance with the idea that the6:26crowd, the masses are buying puts,6:29specifically on GLD, which is what is6:31tracked here with our gold reading.6:33Okay, and check this out. If we take a6:35look at net options volume, this is6:37taking a look at call volume on the day6:38minus put volume on the day. Notice6:41something very interesting here. The6:43crowd continues to pig pile on the put6:45side. So this is telling you again6:47confirming that thesis. Crowd sentiment6:50is super pessimistic on the price of6:52gold right now. So let's recap.6:53Institutional activity is very bullish6:55on gold. Crowd sentiment is very bearish6:58on gold. Both of these are contributing7:00to our overall score which is a very7:03positive one for sentiment. By the way,7:05I hope that was helpful to you in7:06breaking down how EdgeFinder works. I7:08know a lot of our edgefinder users have7:09questions all the time and hopefully7:11these videos are educational to the7:13product that you have if you do have a7:14copy of this. The other thing is the7:15macroeconomic score. Economic growth has7:18been a little bit soft here recently.7:19That produces more of a bearish reading7:21for dollar, a bullish one for gold.7:24Inflation has been a sore spot for gold.7:27Let me explain. Yields are moving7:28higher. This is in the short term a7:30bearish pressure on gold. And I know a7:32lot of people are saying, "Well, Nick,7:33don't you know that yields can move7:35higher with gold?" Yes, you're talking7:36about the debasement trade. That is7:38true. But that's something that plays7:39out longer term. A lot of times a7:41short-term spike in yields most often in7:45most situations where e economic growth7:47is reasonably healthy, that's going to7:49be more of a bearish headwind to gold.7:51Longterm, I'm with you. The debasement7:53trade is real. I get it. Uh but if7:55you're talking about, you know, buy and7:56hold precious metals, physical for the7:57next 10 years, this channel is a little7:59less focused on that. We're focused more8:01on here and now active trading. So with8:04that said, economic growth um you know8:07is something to pay attention to. So is8:09inflation because higher inflation in8:11the short term tends to generally be8:13more of a bearish thing on gold.8:14Long-term elevated levels of inflation,8:17you know, 5year horizon type of thing8:19can generally be good for gold. Think8:20about the last 5 years. We've had8:21elevated inflation and gold has done8:23really well. But a spike in inflation in8:25the short term does not necessarily mean8:27gold rips on that news. I know that can8:30be a little bit confusing and this stuff8:31takes time. So, I invite you to8:32subscribe to the channel, hit the thumbs8:34up button. These content videos that we8:35put out are completely free and8:37hopefully you learn something each day8:38that you show up. Um, okay. So,8:40continuing jobs data, jobs data has been8:43mixed, I would say, but leans just8:45slightly bullish here on our system8:47because jobless claims weekly, uh, ADP8:50numbers, which the monthly figure, and8:52Jolt's job openings numbers, which are a8:53monthly figure, have come in a little8:55lackluster, a little soft. So, this is,8:57in my view, setting us up for an8:59interesting dynamic tomorrow for the9:00Federal Reserve. I don't see a situation9:02in which all of our economic growth9:04metrics are blowing out really strong.9:06So, we should hike interest rates with9:08guidance of more hikes. I also don't9:10think that the probability is high for a9:12hawkish uh hike because the other9:15dynamic here that's at play is oil9:17prices. And as we discussed at length9:20yesterday in my video, which I hope you9:22you hope you watched that video, but it9:24was uh we talked a lot about how oil9:25prices are not something controllable by9:27the Fed. That's pretty much the point.9:29The Fed can't control oil prices, right?9:31The Fed can control like demand side. It9:33can control, you know, how uh how strong9:36the hiring environment potentially is,9:38how much, you know, money is flooding9:40out to banks and to to consumers and9:42borrowing abilities, etc. It can sort of9:44control that on the short end of the the9:46bond yield curve, etc. But it can't9:48control oil prices. And so if you have9:50oil prices rising and rising and rising,9:52you might say, well, what will the Fed9:54do? Will they hike the rates? Well, they9:56can hike to an extent, which might help9:58to slow the economy. But here's the10:00other thing Fed officials often know. A10:04big spike in oil often times does also10:07help to basically slow down the economy.10:10Gas prices go up, consumers feel a10:12pinch, they go out and spend less. It10:14can lead to less growth for companies,10:16corporate earnings, which leads to10:18layoffs. The Fed knows this story as10:20well as I do. And so in my view, the10:22more likely scenario is a insurance hike10:26if anything and from there to sort of10:29hold out as long as possible and hope10:31that oil prices move lower. I generally10:33think that that is most likely the Fed's10:35path because they can't predict or know10:36what's going to happen in Iran, but they10:38can at least hold tight in the meantime.10:41Because here's the thing, oil prices can10:43drop violently and do a lot of the work10:46for the Fed in terms of getting10:47inflation under control or it can work10:50way against them and it's something that10:52they cannot control. If oil prices go up10:54another 30%, suddenly the Fed's got to10:56deal with more inflation that they have10:58no reigns on. If that makes sense. It's11:01a runaway c it's a runaway buggy without11:03a without any rains on it. Right? That's11:05basically what oil is. If this thing11:08keeps going higher, it is an11:09inflationary pressure that is very11:11difficult to control. I also thought it11:13was worth mentioning that notice how11:15from the start of this war, oil has gone11:17up. Um, but at the same time, it has had11:20big ups and downs and swings. What has11:23not had ups and downs is what is most11:26persistently the problem which is11:28inflation expectations as demonstrated11:31by the rise in the government bond11:32yield. The 10ear the 10-year yield11:34continues to rise and rise and rise11:37throughout the entirety of this conflict11:39with little sts and starts but generally11:42speaking a upward trend. I think one of11:44the biggest things in obvious uh nature11:48to this market right now you have the11:49the 10-year crossing over 5%. The11:52biggest uh headwind right now is the11:54Iran conflict. If that gets walked back,11:56if if anything progresses positively in11:59there, you have to understand that gold12:02I I have to recognize this. Notice how12:05gold throughout all of this has held up12:07reasonably well. So you have the 10ear12:09screaming higher, inflation expectations12:12still elevated, problems with, you know,12:14all that sort of stuff. And meanwhile,12:16gold is mostly sideways. I mean, since12:19the beginning of the conflict, gold is12:20down. Let's let's be fair, right? So12:22beginning of the conflict, we saw really12:24a big downside move. But in recent12:26months, despite oil rising back up12:27again, you've had modest moves in gold.12:30Can we only imagine if you do finally12:33get some reprieve here? If we get some12:34relaxation in the Middle East, uh, which12:37is a big ask, but if it were to happen,12:38let's be open-minded to that as a12:40possibility, my goodness, gold and12:43stocks could continue to rip. The same12:45and if not more impressive, is the stock12:47market. Notice how the stock market has12:49barely flinched even though oil prices12:52are ripping higher. Again, you have12:54basically down 2 and a half% or less on12:56the S&P 500, right? we are really12:59holding up solid. So, as you can13:01probably guess, if you get a big cool13:03off in yields, inflation expectations13:06going down, stocks and gold are primed,13:08I think, on a relative strength basis to13:10continue to move higher. Um, I also13:12think that from a from a general13:14perspective of the run it hot campaign,13:17I think the debasement theory is real,13:19but also what people don't realize is13:21that a lot of times in a debasement type13:23environment, stocks can actually do just13:25fine. If you're talking about currency13:27losing a bunch of fiat value, what holds13:30up in that environment? Commodities,13:32stocks, pretty much anything that's not13:34dollars. So my thesis is generally that.13:36My thesis is that if you do get dips in13:38the stock market, they are in my view13:40mostly buyable. I think that commodities13:42look attractive. I think international13:44stocks look attractive. Uh retracements13:46are welcomed in my view. Um in the short13:49term though, I think that the stock13:51market looks a little wobbly here. I13:52think we're due for a bit of a pullback.13:54I think that that very well. We have13:56midterm elections coming up. We have13:58seasonality in September is historically14:00bad. We're seeing that kind of playing14:01out to some extent, but could have some14:03more room to to squeeze lower in my14:05opinion. Not to mention, my system is14:07very bearish on S&P 500, for example.14:10Um, and has been mostly correct in14:12turning. So, I mean, let's see. The14:14first bearish reading that we got was14:16August 25th. August 25th is right here.14:19So, on this day, so we're a little bit14:21lower from there, but really mostly14:22sideways. Do I think we have more room14:24to the downside? I think it's very14:26possible depending on what happens. If14:27you get a hawkish hike tomorrow, that14:30stock market is probably going to see a14:32little bit of a uh a little bit of a14:34freak out because I think that the14:36market has been sort of okay with the14:38idea of like they might hike a little14:39bit. But if the market has to wake up14:41and realize, oh, they're going to hike a14:42lot a bit, it suddenly makes things a14:45lot more challenging. Taking a look at14:46some currencies, I have a bit of a mixed14:49view on the dollar at this time, but14:50from a technical perspective, the Euro14:53dollar does look like it has some14:54potential in my opinion to generally14:57trend down a little bit. Euro dollar is14:59getting a slight bearish lean here on15:01edgeinder and we are seeing some15:03potential lower highs forming here,15:05especially with the break to the15:06downside here. If we get a rally up into15:07this area, I do generally think Euro15:09dollar has some room to slightly trend15:11down. But again, caution is maybe a good15:14idea here because we have the Fed15:16meeting right around the corner. Unless15:17you have a strong conviction one way or15:19the other, uh, Euro dollar might be15:21worth just waiting a little bit on.15:22Pound dollar is giving me a bit of a15:24neutral reading. So, probably going to15:25skip that one. And the dollar yen is15:27kind of an interesting one because it's15:28getting a very bearish reading here and15:30has been doing so for a little bit of15:32time here. Generally speaking, I do like15:34the short side a little bit more here in15:36the here and now as we do get a pretty15:38clean break to the downside retest of15:40this area. Maybe that 50% retracement15:43zone looks like an attractive short sell15:45setup uh for me on the dollar yen. So,15:47I'm going to watch this one close if we15:48do get a rally up into this zone. Real15:50quick, I wanted to take a second to tell15:52you guys about today's video sponsor,15:54Owanda. 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Consider checking16:45them out down below in the description.16:47I'll leave a link where you can explore16:48this special offer that they are16:50offering my subscribers for a limited16:51time. Thanks again to Oanda for16:53supporting today's video. Now, back to16:55the content. By the way, if you want to16:56explore the tool that I'm using here and16:58try it out for yourself, I'll leave a16:59link in the description down below to17:00where you can explore it, check out our17:02tutorials on our website, etc., and set17:04up a trial if that is something that17:06you're interested in doing. And if you17:07want to try, you can also scan the QR17:08code that you see on the screen right17:10now to get all the information about17:11doing so for yourself. Bitcoin is also17:13taking a little bit of a tumble here.17:15And I actually have another video that's17:17going up on our second YouTube channel,17:19A1 Trading, where I actually had a17:21conversation with Merrily from um the17:24stream. We talked all about this whole17:26AI CEO stuff going on, right, where17:28they're calling for a slowdown. I would17:30highly encourage you take some time to17:32go watch that video. Just search up A117:34trading on YouTube. But meanwhile, we17:35also have Bitcoin showing a little bit17:36of weakness here. I actually am17:38interested in a potential short setup on17:40Bitcoin. If it were to break and retest17:42here, I think there may be some17:43opportunity to bet the continuation to17:45the downside that has been most of this17:47year. Uh we are kind of big big picture17:49context-wise, still kind of rejecting17:52the 80,000 level and I'm generally a17:54little bit more pessimistic on it at17:55this time. At least recently, Bitcoin17:57has gotten a minus 8 score on17:59Edgefinder. You can see a downtrend in18:01the score here. Inflation hot, economic18:03growth a little soft, jobs market not so18:05hot or not perfect. Uh and downtrending18:08stuff, seasonal trend. I mean, this is a18:10pretty clear short setup for me. If we18:12can get a technical breakaway to the18:14downside, I'd be looking at this thing18:15probably something like a breakout18:17retest. If we were to see price break18:19down into the mid to low7s, retracement18:21back up, I'd be looking for this kind of18:23move. And taking a look at the DXY here,18:25the dollar index, still in a bit of a18:27range here. I think watching the range18:29to one direction or the other is18:31probably all I'm going to do for now.18:32I'm a bit neutral on the dollar. So if18:34we get you know obviously the the dovish18:36hold or dobish hike I should say uh18:39would be maybe a scenario in which we we18:42do see a sharp drop off in the dollar18:44and obviously if you get the hawkish18:45hike it could go higher and I know I18:47just said it could go up or down but I18:49kind of to be honest don't really have a18:50strong uh guess as to where I think that18:53they're going to go uh with the dollar.18:54I think generally speaking, I do lean a18:57little bit more in the direction of a18:58doubbish hike. Uh, but I don't have19:00enough conviction on the DXY to actually19:03place a trade one way or the other at19:05this time. Trading fundamentals can be a19:07lot of hard work, but we actually made a19:10pretty cool free Telegram channel where19:12we are publishing constantly updates on19:15what is going on from a macro19:16fundamentals perspective. And no, it's19:19not AI. It's not written by a robot.19:20It's written by a real person on our19:22team. His name is Allan. He puts19:24together a report each day on what is19:26going on on things like gold, currency19:28pairs, commodities, indices, etc. on a19:30global financial fundamental analysis19:33basis. It's a really cool newsletter19:35where you can basically stay on top of19:36things by reading for like a minute per19:39day. If that would be interesting to you19:40to join the free Telegram channel, there19:42is a link in the description down below19:44on this video that you can join and get19:47into the action there. We also offer19:49special discount perks for our products19:51as well as for funded accounts and for19:54brokerages etc. And we also do some19:57giveaways as well. So definitely take a19:59second to join the Telegram channel in20:01the description down below. I also want20:03to take a second to just genuinely thank20:04you for supporting my content here. Make20:06sure to subscribe and hit the thumbs up20:08button if you have not already. And I do20:10hope that more videos in the future will20:12continue to help you on your trading20:13journey. Good luck. Thanks for watching.
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