Will the Fed’s sea change hurt investors?

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

September 22, 2024

Yo Pit Crazies,

What I really want to know is what institutional investors think about what the Fed did. Do they leave a footprint? What is that, check this out.

I have been in the markets since 1989 with my first trading floor job. I watched the Dow Jones Industrial Average (Ticker: DJI) get down to 1700 or so. Right now that is 40000+. The point of this is that America as it is currently configured produces a lot of growth and companies thrive on that growth.

I recently saw a senior VP/Cofounder of Palantir Technologies Inc (Ticker: PLTR) bemoan the state of European innovation, he said, paraphrasing “Regulators stifle innovation in Europe.”

He said in his early days at Paypal inc (Ticker: PYPL) Elliot Sptizer tried to kill the company for some unknown reason. That one regulatory overreach episode would have killed Tesla Inc (Ticker: TSLA), PLTR and literally trillions in market cap and growth. Most entrepreneurs take their wins and roll them, spawning new industries, jobs and growth.

So that is how DJI goes from 1700 to 40000 regardless of who is in the WH as long as we don’t become the EU. That brings me to the story of PLTR.

You see they loved it, hated it and now love it again. It is now one of my larger retirement holdings.

Are the institutions leaving their fingerprints on this one?

Massive open interest in is a nice sign

When anyone buys a contract and the liquidity provider sells it, that creates open interest(OI). If the investor keeps the contract open, the OI stays. Deep in the money options suggests, to me, conviction in open positions. Long Term options were created in the early 90s when I started because institutions wanted the long term leverage and IV signal out for years in the future. It is clear when I look around some well performing stocks that the institutional investor is putting their money where their mouth is.

Large ITM OI for PLTR, Very Left column

PLTR has long since made a 52 week low and is now a real growth company. I sell puts in PLTR into dips in my option trading acct in my IRA. In the meantime I bought calls looking for a bit more as the market started to like PLTR again. Now that is back to all time highs I just keep the shares I own.

There are a lot of opportunities like this every week in every year as good companies fall out of favor but pick up some institutional interest. That is the only way stocks can maintain and grab higher levels.

Check out how I do that here.

Now back to the Fed. If inflation is cooling and the Fed reduces rates, that overall is a better scenario for stock regardless of what the gloom and doomers say. More certainty out of the Fed is better for stocks in the long run. Right now, they are aiming rates lower as long as inflation behaves, and that should be better for stocks no matter who wins the election.

To Your Trading Success,