Expect a subdued market until the Federal Open Market Committee announcement at 2 p.m. EDT — and more in Wednesday’s stock market recap.
Supply chain disruptions have slowed economic recoveries, so investors expect an update on bond tapering and potential rate hikes. Earnings have been better than expected, and stocks are trading near overbought levels.
Stock Market Recap
In Wednesday’s stock market recap, the FOMC meeting could give Wall Street direction for the near term. And the announcement will have more of an impact on the bond market than anything else.
If the Federal Reserve decides to take action, bonds will go down, rates will go up and we could see a shift from speculative to defensive stocks. If the Fed isn’t going to take action soon, rates will likely remain at their current level and bonds will go up.
And with stocks so overbought, they’re more vulnerable to a negative catalyst. That’s why I’ve picked out my top long and short plays to trade ahead of the FOMC announcement.
Roger’s Radar: Financials Are Still Looking Fit
The long trade I’m looking at is financial stock Aon Plc (NYSE: AON).
Financials should do well in a low-interest rate environment, and Aon recently hit an all-time high before pulling back toward its 50-day moving average. The stock is currently priced around $304 per share. I would either buy it at the current level, or wait for it to drop a bit to $298 and expect to ride it higher toward $340 over the next quarter.
The short trade I’m looking at is a pet supply company that hit its all-time high back in August before steadily dropping over the past few months.
In this video, you’ll learn what to expect from the Fed on Wednesday… the top sectors and industries right now…. an update on market internals and whether momentum is rising or declining… how the bond market is set to trade over the near term… and the top long and short positions with risk and profit target levels.
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