The stock market is saying “Bring It.”

Nick Colas is one of the smartest guys I know. Here’s how the Convergex chief strategist sees the set up headed into today’s Fear The Talking Fed event (emphasis mine):

Stocks are set up for a rate hike today.  Over the last five days, every sector of the S&P 500 is up at least 1%.  Financials, in theory the most rate-sensitive sector, are also the best performing group (+4.0%).  The index as a whole is up 2.8%.

And the yield on the two year Treasury note sits at 81 basis points. The last number is the most telling, since that’s the highest yield since early 2011 and this part of the yield curve tends to be the most attuned to short term rate moves.

Also, the VIX is down from 27 last Thursday morning to 21.4 at the close today. If U.S. equities were a single stock going into the quarter, you’d expect an earnings beat and positive color from management on the conference call.  In short, the Federal Reserve better deliver both a hike and a chirpy outlook while still tamping down worries over the pace of future rate increases.

Nick’s take is that this is the single most analyzed, dissected and belabored market event in his 25 years on The Street. It’s hard to disagree. I sit in the midst of the media maelstrom every day, people have been absolutely batshit over this meeting all year.

Some parting thoughts from Mr. Colas as we head into Decision Day:

In the end, just remember that you aren’t trading the Fed today. You are trading what people with more knowledge than you think is going to happen. But at 2:00pm, the scales balance again and we all have the same information again.  The smart money has bought ahead of the decision. They think the rest of the world will follow.  We’ll see if they are right.

The important thing isn’t whether you win or lose today, it’s how little you embarrass yourself by thinking you know more than everyone else. You don’t.

Source:

Fed Day Trading Guide
“Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York.”