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.
https://preview.redd.it/zup2fi0716gh1.png?width=1200&format=png&auto=webp&s=59420ea01d42dcf6c61a70002f1074d2610c01f5
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:
https://preview.redd.it/t6le3sv816gh1.png?width=848&format=png&auto=webp&s=891bb0fb87bdca3e53c9263c2bcd209fa0f3d6ac
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.
https://preview.redd.it/4pf2wv5a16gh1.png?width=1400&format=png&auto=webp&s=bd3a393ff8ce5f4b1c772e401b2eee70f558395d
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:
https://preview.redd.it/tzoqe23j16gh1.png?width=1152&format=png&auto=webp&s=e7d02a5fa0834a3455cb21671a4623b02a646b11
This is how the cluster of signals looked before March 2026:
https://preview.redd.it/j4asj32m16gh1.png?width=2268&format=png&auto=webp&s=ab2842f401d4ea5487b558989efe778be134d1ef
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.
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