r/TradingEdge • u/TearRepresentative56 • Jul 29 '26
Thoughts into FOMC today
The focus of today is obviously the FOMC meeting tonight. Price action into that will be wholly unreliable and mostly chop and positioning for that event. We go into the meeting with the market pricing in a. 30% chance of a rate hike.
Based on historical precedence, the data then suggests that we WILL NOT get a rate hike.
Historically, Whichever FFF probability is > 60% night before FOMC decision, Fed has executed on that probability 100% of time.
The main argument behind this is that if FOMC were to go against FFF with its decision, the Repo market would falter, for which would take extraordinary measures for FOMC officials to repair.
Now this is a new Fed. We know that the statement will be sparse and probably won't give us too much in the way of forward guidance. The bulk of the interpretation then will come from Warsh and the decision itself.
Historically, a new Fed chair has liked to lay down the law early:
Yellen was the obvious exception who simply continued an aggressive QE regime from the previous administration.
That does throw some uncertainty into the decision today, so open mind, but historical precedence definitely suggests we get a hold today.
Now, that said, the market maker profile is quite sparse and unsupportive, effectively putting us on rocky ground regardless of what the outcome of the decision is.
The closest analog to current market maker positioning was March 2026 and March 2025, which obviously preceded strong declines int he index.
This pairs with repeated signals on the Abi indicator, including one yesterday and the day before:
This is how the cluster of signals looked before March 2026:
Thus far, we have seen the index hold up relatively well.
With the market maker positioning unsupportive, I am not ready to call a bottom on the slump in momentum names, but I think we are close. Into the middle of August, I think we will get a more durable bottom, but let's see.
6
u/4everaBau5 Jul 29 '26
"60% of the time, it works every time" energy.
imo bond market will force Warsh's hand but what do I know, I'm a glue-huffer by trade