2:00 PM has come and gone. Not only was that the deadline for me to turn in this article but it was when the Fed finally released the decision on interest rates, which was then followed by a press conference with Chairman Powell.
Will this be the catalyst that finally breaks us out of a range? Look at the market today and you be the judge.
Yesterday’s CPI looked like it might get it done; a cooler-than-expected number caused the S&P 500 Index to rocket up some 3.4% on the opening bell–remember options were pricing in a 3.1% move–only to beat a hasty retreat and remain range bound for the rest of the day.
Peak inflation is yesterday’s news. The story for 2023 will be economic downturn and earnings decline, which hasn’t been priced in yet at the index level.
Looking at the SPY option chain, we see the implied volatility for options expiring on Tuesday and Wednesday are near the 50% mark, the highest reading for any expiration in over six months. It suggests market’s are pricing in a 3.15% move on each day.
So, for now, SPY is still stuck in the…
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