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What Can the Fed Do for You?

Real Money contributor James "Rev Shark" Deporre looks at today's action and looks ahead to where the opportunities will be after the Fed's rate decision.
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Today in his column, James "Rev Shark" Deporre writes about the subject on everyone’s mind: the Federal Reserve.

Hopefully, once the Fed is done and we see the immediate reaction, we will have a return to a focus on stock picking, he says.  

"One stock I'm eyeing on weakness is Upstart Holdings  (UPST) - Get Report. This was a major growth stock winner, but a lock-up of shares is expiring, and that has caused some major pressure over the last two weeks." Read more about what Deporre says about how the stock looks technically, and what he's going to do with it on Real Money.

The indexes struggled Tuesday, but the action was worse than it looked. Nervousness about Wednesday's Federal Open Market Committee interest rate decision caused some rotation out of growth and speculative names again, but big caps held up relatively well, which kept the losses in the indexes fairly mild.

In midday trade Wednesday, stocks fluctuated. The Dow Jones Industrial Average fell 32 points, or 0.1%, to 34,266, the S&P 500 slipped 0.03% and the Nasdaq gained 0.23%. The yield on the benchmark 10-year Treasury note dipped Wednesday to 1.487%.

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On Wednesday, the FOMC announcement is at 2 p.m. Eastern, which means we are going to have plenty of random and slow action. This decision and the press conference by Fed Chief Jerome Powell that follows are going to be of more importance than usual, because there is some pressure on the Fed to tamp down its dovishness and to start to look ahead to some tightening.

Even if the Fed persists in the message that inflation is "transitory," that doesn't mean that it won't sound more hawkish.

Markets don’t like uncertainty, but right now they have it in spades. April and May’s CPI reports have fueled fears of growing inflation among many in the market. But that’s not the problem.

Investors always wonder what the Federal Reserve will do at its quarterly meetings, and they always worry about what inflation might do in the months ahead.

This season is different. The divide is unusually driven by politics, with the cries of “inflation” or “price fluctuations” largely split along partisan lines rather than market-driven divisions. And the warnings have gotten abnormally strident, with each camp warning that only the solutions can avert disaster.

This has made it harder for investors to seek a strong signal among the noise. Trading has fluctuated and, as Deporre writes, often struggled in the face of this uncertainty.

Read the latest investing advice and trading strategies post-FOMC from Real Money.