Trading insight: A repeat of 1960s, 70s, and 80s interest rate mistakes?

Market Talk

As of May 23 2023 6:49 UTC

The start and stop interest rate decisions during the 1960s - 70s saw rates hit 19% by the early 1980s.

• If the Fed pauses in June, there is no guarantee that they will have to restart
• Core inflation and wage growth needs to slow much further
• Smaller banks remain at risk

Active trading and volatility strategies could continue to be the source of positive returns in the near and far time frames

Relative value volatility hedge fund index (Eurekahedge indices)

The above chart illustrates the performance of nine fund managers who trade opportunistic volatility strategies.

Traders could use the VXX index for trading volatility.

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Today’s economic calendar

FOMC minutes on deck

• The minutes could provide insights into the number of board members who are for or against pausing interest rate hikes

Source: Tradingview / J. Knobel May 24 2023 5:40 UTC

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Tactical trading point of view

What is tactical trading?

When a trader believes in short term market trends and actively positions trades to capture those trends rather than buying and holding.

Tactical ideas and commentary for speculative trading:

• VXX index current price $19.92. Despite the multi-month downtrend, recent price has pushed above its 40 day moving average (bullish), 9 day directional movement index DMI(+) has crossed above DMI(-), indicating that price is moving higher. Upside prospects for a move higher toward $22 can not be ruled out, while downside risk is spotted below the $17.35 support.