For over a year, the market’s been begging the Fed for a rate cut.
Inflation’s cooled (a little), growth’s wobbly, and Wall Street’s been banking on that sweet mid-September pivot to kick off the next big rally.
But what happens when everyone’s already positioned for that rally before the rate cut actually happens?
That’s when you run into a nasty little setup traders know all too well, and it’s called “sell the news.”
And right now, JPMorgan’s top macro team is sounding the alarm.
They’re not saying a cut won’t happen; they think it will.
But they’re warning that the rate cut itself could spark a selloff, not a rally.
The thing the market wants could end up being the same thing that trips it flat on its face.
But traders can still come out on top if they follow these three steps.
The ‘Why’ of a Crowded Market
But first, a little background.
JPMorgan points to a few big problems:
- Sticky wage inflation – Services inflation hasn’t rolled over like goods have. The Fed knows this, and may not sound as dovish as traders want.
- Tariff-related cost pressures – Companies are passing higher input costs to consumers. That can keep inflation hotter than expected.
- Crowded equity positioning – Everyone and their cousin is long tech. That means there’s not much dry powder left.
- Weak corporate buybacks – Companies aren’t stepping in to scoop up shares, which used to help cushion drawdowns.
Put it all together, and you’ve got the perfect recipe for disappointment.
Now don’t get me wrong: JPMorgan still leans mildly bullish over the longer term.
But they’re waving a huge red flag in the short run, warning that a Fed cut may already be priced in.
And if you’re not ready with a plan, you’re the one who gets dumped on.
You can fix that by taking these steps.
Step One: Understand ‘Sell the News’
If you’re not familiar with the term, it’s simple: When a bullish catalyst is fully expected, and everyone piles into the same trade beforehand, the actual event triggers profit-taking, not fresh buying.
Traders rush in before the news, not after.
Then once the news hits, the question becomes: Who’s left to buy?
If the answer is “nobody,” you get a pullback.
So the time to prepare isn’t after Fed Chairman Powell walks to the podium next Wednesday after a much-anticipated FOMC meeting.
It’s now.
Step Two: Hedge the Right Way
Let’s say you’ve got some decent exposure to QQQ, SPY, or individual growth names.
You don’t want to dump them, but you’re not willing to ride out a 5%–10% pullback either.
You don’t need to sell. But you do need a tactical hedge.
Here’s a basic idea I’ve used in situations like this:
Buy a put spread on SPY or QQQ, dated out to mid-October.
For example, if SPY is trading around 450, you might buy the 445 put and sell the 430 put. That limits your downside while keeping the cost reasonable.
Why a spread instead of a naked put? Lower premium, and you’re not betting on a crash, just a modest correction.
This lets you stay long your core positions while protecting against a news-driven flush.
Step Three: Look for Gold Nuggets
JPMorgan didn’t stop at the “sell the news” warning. They also said they’re upping their gold allocation.
And that part of the call I really like.
Here’s why:
- The dollar is softening – If the Fed cuts, real yields drop, and the dollar typically weakens. Gold loves that.
- Geopolitical risk is creeping back in – Elections, tariffs, China … there’s a lot that can go sideways.
- It’s under-owned – Most traders have ignored gold this year while chasing AI stocks. That’s good. You want to own what isn’t crowded.
Gold won’t double overnight, but it will hold up if equities wobble post-Fed.
That’s exactly the kind of offset you want heading into a potentially choppy fall.
Watch Your Step
This market’s walking a tightrope.
Everyone’s loaded up for good news, and when that happens, the smallest miss can knock the whole thing off balance.
If Powell says the wrong thing … if inflation surprises higher … if tariffs bite harder than expected…
Boom, you’ve got a trapdoor situation.
But if you’re hedged and positioned in the right offsets like gold?
You’re not sweating it.
And that’s how professionals trade the Fed, not with hope, but with a plan.
Stay street smart,
Jeff Zananiri
P.S. Want to see real trades, in real time? Friday at 4 p.m. ET, Danny Phee is walking through exactly how he’s attacking this market — what he’s trading, why he’s trading it, and how he’s staying ahead of the crowd.
Show up, dial in, and see how the pros get it done.
*Past performance does not indicate future results
