Opinion: Federal Reserve FOMC, Pre-Meeting Market Risk Appetite Decline, Option Expiry, and Hedging Amplify Volatility

June 16 – DeGentrading, a leverage product research firm, noted that ahead of the Federal Reserve’s FOMC meeting, this is an opportune time for deleveraging; short-term weakness is to be expected. The market posted a large-scale short-covering rally yesterday, so some softness ahead of the FOMC amid hedging positioning is a normal development. From a longer-term perspective, this stock market pullback may represent the market’s final opportunity to add leverage before the FOMC’s "uncertain checkpoint." Following this event, the market is projected to resume its upward trend and overcome its current "wall of worry." Heightened market volatility is anticipated this week due to the shortened trading period, overlapping with the FOMC meeting and Options Expiration (OPX). Note: Thursday at 2:00 PM ET, the Federal Reserve’s FOMC will release its interest rate decision and Summary of Economic Projections; at 2:30 PM ET, Fed Chair Powell will hold a monetary policy press conference. Friday, June 19, the New York Stock Exchange will be closed for the Juneteenth holiday.