🎇 The Thrill of FOMC

Hello, my Friends!

This past week delivered an adrenaline-fueled spectacle: FOMC.

💼 It's the kind of convergence that keeps even seasoned veterans on the edge of their seats, where portfolios can pivot in an instant.

⚠️ I always remind myself - and urge you - to exercise heightened caution during these high-stakes periods.

🎢 They unleash unparalleled volatility, turning price action into a whirlwind of opportunity and peril.

Of course, prudence is my constant companion, regardless of the calendar. Yet, FOMC weeks carry an electrifying aura - one that never loses its edge, no matter how many cycles you've navigated.

Having tracked these pivotal economic events for nearly a decade, I've distilled invaluable insights. Join me as we dive into the lessons that can sharpen your mindset.

If you've experienced setbacks in the markets - such as betting against a persistent rally or missing a reversal - remember, these challenges are inherent to trading.

However, embracing collective wisdom can transform your approach. This concept refers to the aggregated insights, opinions, and actions of market participants, often yielding more accurate outcomes than individual judgment.

Think of it as the market's "hive mind": crowds aren't infallible, but they provide valuable signals over time.

In trading, collective wisdom manifests in price action - and responses to events like Federal Open Market Committee (FOMC) meetings. Struggling traders often err by ignoring it, pursuing contrarian strategies or relying on intuition.

This matters because overconfidence - assuming you're smarter than the market - leads to losses.

Over 2015–2025, FOMC actions aligned with economic cycles: hikes during recovery and inflation fights, cuts amid slowdowns.

Collective wisdom isn't blind following - it's a filter for your strategies. If struggling, track one sentiment indicator this week. Markets favor humility; integrate the hive mind to sharpen your edge and sustain success.

Today's trading session unfolded with intriguing dynamics, characterized by subdued volatility in the wake of yesterday's FOMC announcement.

I capitalized on two bearish setups, driven by the tech sector's pronounced underperformance relative to broader indices throughout the day.

This sectoral divergence highlighted emerging weaknesses, allowing for targeted positioning.

However, the session's climax arrived in the final hours: a dramatic reversal that erased earlier declines and likely caught many swing traders off guard. Those anticipating a continuation of the bearish momentum into tomorrow were reminded of the market's unpredictability.

This serves as a compelling case study in risk management. It's precisely why I adhere to a disciplined practice of closing all positions before the New York close - resisting the temptation posed by uncertainties surrounding earnings releases and impulsive headlines.

In volatile environments like these, preserving capital trumps speculation.

Today's session reflected lingering caution following Federal Reserve Chair Jerome Powell's press conference, with market weakness persisting through the close.

The after-hours volatility spikes were largely attributable to major earnings releases from tech giants, which introduced fresh momentum into extended trading.

These results underscore the resilience of Big Tech amid economic uncertainty, though Powell's hawkish tone may cap near-term gains.

Investors face a dilemma. Headlines everywhere say tariffs and AI hype are distorting public markets.

Now, the S&P is trading at over 30x earnings—a level historically linked to crashes.

And the Fed is lowering rates, potentially adding fuel to the fire.

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Until next time,
Steve B
Founder, The Daily Impulse

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This newsletter is for educational purposes only and does not offer financial or investment advice. It should not be taken as a recommendation to trade assets or make any financial decisions. I am not a registered investment advisor, broker, or licensed financial professional. Please be cautious and ensure you conduct thorough research or consult with a financial professional before making any investment choices. Trading and investing involve significant risks, including the potential for substantial financial loss.

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