COMMENT ON THIS WEEK'S FOMC MEETING (9:00 pm EST)
Today and tomorrow the Fed has its first FOMC meeting of the new year. It will conclude at 2PM tomorrow afternoon. After three rate cuts last year, it appears the Fed will not cut rates this time around as inflation is still problematic. Last year, many analysts were expecting the Fed to pause their rate cutting in Jan. 2025 but then to continue cuts in March; however, persistent inflation is leading many to doubt there will be a cut in March.
It's hard to say how the markets will react to tomorrow's Fed statement at 2PM (and the subsequent press conference with Fed Chairman Jerome Powell). Even though most are expecting a pause in rate cutting, too much hawkish rhetoric from Mr. Powell could trigger a sell-off, especially since our cycle analysis and reversal timing is suggesting that a significant correction down is imminent.
The S&P 500 and NASDAQ both made new all-time highs last week without the DOW, which still remains below its all-time high this week. Thus this bearish divergence signal is persisting. On the other hand, the DOW has not made a new weekly low so far this week while the S&P 500 and NASDAQ did make new weekly lows yesterday, and this gives us a BULLISH divergence signal. We'll have to wait and see how this market reacts to the Fed meeting tomorrow to determine which signal is correct.
Today and tomorrow the Fed has its first FOMC meeting of the new year. It will conclude at 2PM tomorrow afternoon. After three rate cuts last year, it appears the Fed will not cut rates this time around as inflation is still problematic. Last year, many analysts were expecting the Fed to pause their rate cutting in Jan. 2025 but then to continue cuts in March; however, persistent inflation is leading many to doubt there will be a cut in March.
It's hard to say how the markets will react to tomorrow's Fed statement at 2PM (and the subsequent press conference with Fed Chairman Jerome Powell). Even though most are expecting a pause in rate cutting, too much hawkish rhetoric from Mr. Powell could trigger a sell-off, especially since our cycle analysis and reversal timing is suggesting that a significant correction down is imminent.
The S&P 500 and NASDAQ both made new all-time highs last week without the DOW, which still remains below its all-time high this week. Thus this bearish divergence signal is persisting. On the other hand, the DOW has not made a new weekly low so far this week while the S&P 500 and NASDAQ did make new weekly lows yesterday, and this gives us a BULLISH divergence signal. We'll have to wait and see how this market reacts to the Fed meeting tomorrow to determine which signal is correct.
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