Karpel’s Corner: Bears beat down after Fed

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and  never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

Bears beat down after Fed

The Fed spoke and the market did not look back, with all major averages hitting highs.

As I noted before, I wanted to see Small Caps ($IWM/$RUT) break out to the upside after the announcement, and they did. This is a positive sign for small business growth, and will continue to keep Main Street and Wall Street money in the market.

Volatility was crushed post the announcement. The closing June VIX future print hurt a lot of brilliantly positioned volatility bulls off guard.

If you are a Bear, this was a tough night for you. But you need to stay disciplined and reduce risk capital until volatility moves and presents higher probability set ups.

For the Bulls, do not get caught watching with pride. Manage winners. You will notice that a lot of the bullish plays have been deep in-the-money debit spreads and that is by design, the Vega risk at this juncture is too high for taking lottery shots.

See you next time at Karpel’s Corner!