FOMC Day: My Strategy for Volatility and Market Analysis

Hello everyone. Today is a very special day for the financial markets, and believe me, with over 30 years of trading behind me, I know this is a critical moment. It’s FOMC day: we’re going to have volatility, risks, but also tears for those who aren’t prepared. My goal here is to help you understand what’s at stake, how to manage your capital, and why caution is the better part of valor today.

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Why I Am Staying in Port Today

Frankly, FOMC days are like announcing a hurricane. It arguably isn’t the time to take your pedal boat out for a spin at sea. Here is the raw reality of the situation:

1. The beginner’s trap: Many are drawn to the light like moths because of the market hyperactivity. The result? They burn their wings.
2. The pro attitude: While amateurs rush toward the eye of the storm, experienced traders return to port. We observe, we wait, and sometimes we have a drink while watching the show from afar.
3. Drastic risk management: Even with my experience and my status as a CME member, I divide my positions by 30 if I trade. I switch to "quasi-demo" mode for fun or to attempt a key level, but only with money I am ready to lose.

Basically, don’t try to prove your testosterone. You aren’t going to change your life in one day, but you can destroy your account.

What the FedWatch Tells Us

To navigate this chaos, you need compasses. The main tool is the CME Group’s FedWatch. It represents the reference to see what investors anticipate.

Currently, 97.2% of investors expect stable rates. This is the crucial information. If the Fed Chair confirms this stability, things will already move. But watch out for the nuance: if we step out of this expected range, it will be an explosion (upward or downward depending on the direction). We are noting an interesting evolution, by the way: a month ago, nearly 20% of people were hoping for a cut. Today, we have returned to reality.

A Quick Aside on the Real Economy

Some dream of low rates to clear up real estate, a bit like Donald Trump would like. But keep in mind that "free" money creates monstrous inflation. If your house doubles in value, congratulations, but if all the houses around it double too, you haven’t really gotten richer. You have just preserved your nominal purchasing power in a more expensive market.

The Current State of Affairs: Indices, Gold, and Crypto

We are observing a fascinating dynamic and a real sectoral imbalance even before the announcements.

1. The Frenzy of the Nasdaq and S&P 500

It is total excitement. We are on annual highs, it’s pushing very hard, probably driven by the anticipation of Tech earnings (Tesla, Meta). To use a slightly colorful image:

• The Nasdaq seems to be running on heroin (hyper-volatility, moving in all directions).
• The S&P 500 is running on cocaine (it’s the little brother, following the movement but a notch below).
• If you find the Nasdaq too violent, the S&P 500 is often a more manageable alternative.

2. The Dow Jones and CAC 40 Lagging Behind

Conversely, the Dow Jones is in the red, undergoing a sectoral rebalancing. Money is being taken out here to be put into Tech. As for the CAC 40… it’s depression. We have been stuck in a range since early December, with no volume. It doesn’t serve much purpose at the moment, it is sad to say.

3. Gold and Bitcoin

Gold is literally exploding after decades of stagnation (1980–2010). Uncertainty benefits it immensely. However, Bitcoin, a so-called safe haven, remains blocked on its monthly pivot. If it doesn’t clear the technical obstacles soon, its current configuration is dangerously starting to resemble that of the CAC 40 (which is not a compliment).

Conclusion

In summary, be responsible adults today. Let the FOMC storm pass or drastically reduce your exposure. On my side, I am also preparing the future of my school. For your information, 2026 will be the last year for my seminars in Europe before I switch to Canada, the USA, and later Japan. So there are only a few slots left for those who want to train in person on the old continent.

Be careful, preserve your capital, and see you tomorrow to take stock once the storm has passed.

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