Image Source: Pexels

The Fed announces their rate decision at 2pm EST today. Every trader I know is glued to their screen waiting.

I covered one Walmart short for $25 profit this morning. That's my entire day. 

I called my brother-in-law who trades options aggressively. He's sitting out too.

I won't touch anything else until tomorrow. Not because I lack conviction. 

Because I spent 11 years sitting in committee meetings at large asset management firms after Fed announcements.

I know exactly what happens next. And it doesn't happen today.

Today means nothing. Tomorrow is everything.

Here's why the market's response today tells you nothing about what comes next.

Day One Is Theatre

Powell cuts rates by 25 basis points at 2pm. The market moves.

Maybe it spikes 35 points. Maybe it drops then reverses. Maybe it rips then sells off into the close.

I've watched this play out dozens times. The knee-jerk reaction never predicts the actual move. It's algorithms reacting to headlines. Retail traders guessing what the words mean before anyone understands the implications.

The institutions running real money don't trade on Powell's first sentence. They wait.

What Actually Happens Tomorrow

The committees meet the next morning. Asset managers. Hedge funds. Broker-dealers. Large family offices.

They gather in conference rooms. Analysts present. Portfolio managers discuss. They make decisions based on what the Fed announcement actually means for positioning.

This happens on sobriety. This happens with critical thinking. This is when institutional capital moves with purpose instead of reacting to volatility.

Here's how these meetings work:

• Portfolio managers review existing positions against new Fed policy
• Risk teams calculate exposure changes needed across sectors
• Trading desks get instructions for systematic buying or selling programs
• Decisions happen based on analysis, not emotion

That systematic flow is what moves markets. Not the 2pm spike. Not Powell's tone. The coordinated institutional response that emerges 24 hours later.

Nobody I know who runs serious money is forcing trades into this announcement. They're waiting to see what committees decide tomorrow when the actual positioning begins.

The Three Scenarios That Matter Tomorrow

Powell cuts rates today. That's 88% probability. Everyone knows it's coming.

The question isn't whether he cuts. The question is what he says about future cuts.

Scenario one: He cuts today and opens the door to March or April. The market gets some support. Committees decide current positioning works. Systematic buying continues through year-end.

Scenario two: He cuts today but signals this is the last one for a while. Committees reassess. Some sectors get sold. Others get defensive allocation. Real two-sided trading returns.

Scenario three: He surprises everyone and doesn't cut. This is the dangerous one. December 2018 all over again.

Back then, Powell raised rates a quarter point when markets expected him to pause. The S&P dropped 20% in weeks. Not because of the rate hike itself. Because Powell signaled more hikes were coming when the economy was already slowing.

If he doesn't cut today with inflation data still elevated, it signals the Fed sees something worse coming. That creates massive downside implications when committees meet tomorrow.

You won't know which scenario plays out by watching today's price action. You'll know by watching tomorrow's systematic flow after committees finish their analysis.

Why I'm Sitting Out Today

Don't get caught in the crossfire. Don't overthink every word Powell says. Don't try to trade the knee-jerk reaction that gets reversed an hour later.

I'm not trading today. I won't have a good feeling about direction until tomorrow when the committees get together and act on sobriety. When real positioning decisions happen instead of algorithmic responses to headlines.

The real market begins tomorrow when institutional money shows its hand.

More By This Author:

Small Caps Just Hit All-Time Highs While Nobody Was Watching
3 Trades That Don't Need The Fed
Bears Are On Santa’s Naughty List