Good earnings from Apple (AAPL) and some smaller cap names like Enphase Energy (ENPH) and Mercury Systems (MRCY) are keeping market players entertained, but most traders are impatiently waiting for the Federal Open Market Committee's decision at 2 pm ET.
Although the Fed has been the single biggest market positive for many years now, there is a surprising level of criticism on everything they do. Almost every bearish thesis out there is premised on the problems that central banks are creating with their huge balance sheets and endless cheap capital. The narrative now is that the Fed is running out of ammunition and will be unable to effectively deal with a slowing economy.
These arguments about how the Fed policies will lead to a market disaster have been out there ever since they cut rates about 12 years ago. For a long time it was predicted that it would lead to inflation or stagflation but that never has been an issue.
Criticizing Fed policy is easy but what is hard is timing how it will impact the market. The single best piece of trading advice for a very long time has been 'don't fight the Fed'. That simply means that when the Fed is dovish you stick with the market uptrend.
Many bears are convinced that the Fed decision today will trigger a major market turn. The argument is logical and compelling but we have been hearing variations of it for a decade. Many market players believe that the easy money policies of the Fed are unjustified but they have come to love them from a stock market standpoint.
The reaction to the Fed this afternoon will provide some insight into whether the bears may finally be right but it has been the wrong bet for so long it is difficult to believe they have the timing correct this time.
I'm doing a few minor trades while waiting for the Fed news but won't do anything aggressive until the policy statement is released.