Good morning, traders…
Tomorrow is one of the most important days of the year.
The Federal Reserve makes its rate decision, and markets are pricing in a 96% chance of a 0.25% cut.
But when a setup looks too obvious, it often does the opposite of what everyone expects.
I was analyzing the setup last night when I noticed something eerily familiar…
Perfect consensus, baked-in expectations, everyone positioned in the same direction.
It reminds me of situations where companies beat earnings estimates exactly as expected, then the stock drops the next morning (because all the buying pressure got used up before the announcement).
That’s the psychology behind “sell the news” events — and understanding this pattern has saved me thousands over the years.
Yesterday, I bought SPXS shares for the first time in months. Not because I think this 30% rally is over, but because tomorrow has all the makings of a counterintuitive move.
If you’re positioned for only one outcome tomorrow, you’re setting yourself up for disaster.
Let Me Show You Why Tomorrow’s Fed Decision Could Deliver Exactly What Everyone Wants (And The Market Could Still Be Red)…
What is a “Sell the News” Event?
A “sell the news” event happens when markets rally ahead of expected positive news, then drop after the announcement (even when the news is exactly what everyone wanted).
Here’s how it works:
- The market expects that a company will beat earnings.
- The stock runs up for weeks.
- The company reports the expected beat.
- The stock drops the next day.
Why? There’s no more immediate good news. All the buying happened before the announcement.
Once the news hits, there’s nobody left to buy.
This pattern repeats across every market, every timeframe.
Drug companies rally into FDA approvals. Merger targets spike ahead of regulatory announcements.
But the psychology is consistent: when outcomes become too certain, markets find ways to disappoint even when delivering exactly what was promised.
Tomorrow’s Fed decision has those same characteristics. A 0.25% cut is priced in with 96% certainty.
Everyone’s positioned for the same outcome: universal bullish sentiment on what lower rates mean for risk assets.
How to Position For Either Scenario
Big picture: I think we’ll see 100 basis points of interest rate cuts over the next 12 months.
That’s massively bullish for growth names, utilities, and real estate.
But belief in the long-term direction doesn’t mean you can ignore short-term volatility.
That’s why I bought Direxion Daily S&P 500 Bear 3X (NYSEARCA: SPXS) shares as insurance.
I may layer in some long-dated puts on top. Cheap protection with a 10% stop.
By pairing these bearish positions with my open long positions, I’m prepared for either outcome…
If Powell delivers the expected cut and markets rally, I’ll stop out my hedge positions and ride momentum higher.
But if we get that classic “sell-the-news” reaction, my protection will pay out handsomely while I deploy cash into quality names at more reasonable prices.
Why This Setup Demands Preparation Over Prediction
Remember: the S&P 500 has returned 30% in five months. That’s only happened six times in history.
And yes, it eventually went higher in every case . But “eventually” doesn’t mean “immediately.”
Warren Buffett once said…
Tomorrow won’t change the long-term trajectory. More rate cuts are coming, earnings are growing, and quality companies will keep creating value.
But it could create short-term volatility. How you respond to that could make or break your entire month…
Your Game Plan for Fed Day
Here’s what you need to do:
- Review your position sizes — If tomorrow’s announcement would cause you stress, you’re risking too much
- Build your shopping list — Identify quality names you’d want to own at 10-15% discounts from current levels
- Have cash ready — Keep powder dry to deploy if we get that sell-the-news pullback
You don’t need to panic about tomorrow’s decision, but you do need to prepare.
The market’s going to do whatever it wants tomorrow.
Our job isn’t to guess — it’s to set ourselves up for gains, no matter what the market does.
But the Fed decision isn’t the only catalyst that makes tomorrow one of the most crucial days of 2025…
Tomorrow night, I’m going to reveal a controversial (yet 100% legal) way to turn what Wall Street calls “dumb money” into potential double and triple-digit gains.*
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Happy trading,
Ben Sturgill
*Past performance does not indicate future results
