EB Daily Market Report - Wednesday, September 17, 2025

This will be brief.

The Federal Reserve announced a 25 basis point cut in the fed funds rate and signaled that two more rate cuts are on the way in 2025. That's the good news (and it really is good news). Unfortunately, the response this afternoon has been all over the place, which can be typical after a big interest rate decision. Initially, the small cap IWM was clearly in breakout territory, pushing above 244 when any close above 241 would be a bullish breakout. But then the sellers took their turn and the IWM fell from its high above 244 to its low near 237 in less than an hour. CRAZY action!

I just took a quick snapshot of the IWM on an intraday chart to highlight today's volatility. Check out the chart:

This is just to show you how quickly the IWM is moving in BOTH directions. I have no idea where it will finish today. I love the news today, but what's truly critical to a trader is where we close. If the IWM can close today above 241, I view it as short-term bullish. Failure to do so, however, could lead to short-term weakness as the chart will show a long tail above resistance with failure to make that closing breakout. That tends to mark short-term tops.

Meanwhile, the regional bank ETF (KRE) surged after the announcement to almost 66, but quickly retreated with the IWM. The closing number I'm watching there is 66.35, thought the really big number is 67.51, the high close from November 2024.

The more growth-oriented NASDAQ 100 ($NDX) and S&P 500 ($SPX) took bigger hits earlier and after the Fed announcement, but they're bouncing back and trying to turn positive:

Trying to make sense of all of this in an hour after the decision is absolute insanity. We need to see how things settle by the end of the day and also check out the relative performance of various asset classes over the course of the next few days to weeks. I do expect to see leadership from areas that are rate sensitive, like small caps, regional banks, homebuilders, transports, etc.

Let's remember the history of stocks during the 2nd half of September and also keep in mind this is options expiration week. Lots to think about and lots to confuse us. Focus on the charts and where we close.

Happy trading!
Tom