Market Outlook

Summary of Yesterday's FOMC and Its Impact on the Market

Yesterday, the meeting was almost ongoing from the US stock market open until just after 11 AM China time, so the FOMC was only observed through ongoing discussions on Jin10 and group chats with family. I didn't have time to watch it live. Before the meeting, I analyzed institutional expectations for the dot plot, which were generally around 1 rate cut. The announced outcome was also a single rate cut, matching expectations.

We previously predicted that if one rate cut was expected, the market might fluctuate between 84-94, with the possibility of a brief upward push to 96-98 before quickly retreating. Breaking through this range is quite difficult. If it cannot break through continuously, it might further decline before the January FOMC meeting in late January.

In Powell's speech, he acknowledged the weakening employment situation, but it appears that committee members did not reach a consensus on solving this issue through continued rate cuts in the future. Currently, the employment weakening is only short-term data. If employment worsens further, the likelihood and frequency of rate cuts could increase.

In the absence of consensus, the outcomes of the upcoming FOMC meetings are more difficult to predict.

Currently, CME predicts about a 22% chance of a rate cut in January 2026, which is relatively low.

Looking at the market, we have yet to reach our predicted 96,500 level. The highest has been around 94,500 before turning downward, indicating that bulls are relatively weak. I believe the next movement will be a range-bound fluctuation between 84-94, with a possibility that each time it touches above 94, it could trigger liquidity sweeping in the 96-98 range. Therefore, many traders are now planning to short within this range.

Short-term support levels are at 89 and 87,700. I believe both levels could support a rebound to the 94 range, but the upside potential for longs shouldn't be overestimated. The main expectation has shifted from a continued rebound to a range-bound fluctuation.

This article is sponsored by #BCGAME｜@bcgame @bcgamecoin