The Federal Reserve is expected to cut rates for the first time in four years, sparking widespread anticipation. Traders are closely watching the FOMC meeting, and Jared Levy Chief Market Strategist at Peak American Financial, shared his thoughts on how to approach this week’s market activity — including a savvy Dillard’s trade. Read to the end to learn more.
Rate Cut Expectations: 25 or 50 Basis Points?
Levy noted that while many traders expect a 25-basis-point cut, 60% are betting on a larger 50-basis-point reduction. He explained the urgency, stating that liquidity must flow back into the market. Levy stressed that the impact of rate cuts takes time—typically three to nine months before it affects consumers—which is why quick action is essential.
“We’re already seeing cracks in the foundation of the economy, including the labor market and manufacturing,” he said. Jared will be closely watching the Philly Manufacturing Index report due Thursday to assess further signs of economic stress.
Although a 50-basis-point cut could initially spook the market, Levy is optimistic about a rebound. “I’m all for a 50-point cut,” he said. “I believe the market will sell off quickly due to panic, but it will then resume its upward trajectory.”
A Big Call for Bold Action
Levy is confident in his prediction, despite the cautious approach others might take. “Maybe I’m being overly optimistic,” he admitted, “but I feel the Fed needs to act fast, and I’m putting my neck out on the 50-basis-point bet.”
Trade of the Day: Dillard’s Short Position
In addition to his Fed predictions, Levy also shared his trade of the day, focusing on Dillard’s. The stock has fallen sharply from highs above $400, and Levy sees more downside ahead. He explained that the recent rally in Dillard’s stock is likely just a sympathy bounce, and he expects the company’s performance to weaken further.
“My target for Dillard’s is $333 a share,” Levy said. He predicts this drop will happen soon, especially with the company’s earnings report not due until mid-November. Levy also pointed to technical indicators, such as the recent “death cross,” where the 50-day moving average dips below the 200-day moving average—a bearish signal.
He advised shorting Dillard’s around $352, with a target of $333. Despite the ominous name, Levy explained that the death cross is simply a technical indicator that typically signals further declines.
Conclusion: A Strategy for Uncertain Markets
Levy’s advice is clear: watch the Fed’s moves closely and prepare for volatility. Whether it’s betting on the rate cut or shorting a struggling retail stock like Dillard’s, traders need to stay focused and adjust their strategies accordingly.
For more insights from Jared Levy, check out his analysis on Business First AM, and stay tuned for updates on his latest trades and market strategies.
CLICK HERE to watch Jared Levy on Business First AM covering his Dillard’s trade.
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