📈 Risk On

Institutions are risk on going into FOMC.

Risk On

This week is a very important one because we have FOMC on Wednesday where we will learn about rate cuts and we will see the Fed Dot Plot of where they expected rate cuts to be going into the future.

Despite this uncertainty, we are seeing signs of investors increasing their risk into this news.

It’s possible this changes by tomorrow’s data, but here’s what I’m seeing.

The white line on the chart represents the 0 line - all sectors above it are rising and all sectors below it are falling.

If you look at where money is flowing, it’s into more risky sectors - biotech, consumer discretionary, tech, regionals, etc.

At the same time, we are seeing “defensive” sectors such as energy and consumer staples be sold off.

This tells us that investors increased their risk yesterday by buying risk-on sectors and selling defensive sectors.

One other thing of note is that we are seeing SPY outperform RSP (RSP is the equal weight S&P 500).

This points to the same theme - that SPY is seeing buying in its overweight stocks (which are predominantly risk-on tech stocks) relative to the rest of the index.

This tells us a lot about how institutions are viewing the market right now and provides us with new trade ideas.

Watch the video below for how I plan to capitalize on this trend: