FED Surrenders.

Daily Plan 12.11.25

With this 25 basis point trim, the Fed has dragged rates down to 3.5%.

This is the cheapest money we’ve seen in three years. And, naturally, they couldn’t agree on anything. Miran wanted to slash by 50 basis points, while two others didn’t want to cut at all.

Powell did his usual bit— a little hawkish, a little dovish and muttered something about one more cut next year.

While some could argue Powell leaned slightly hawkish, and did call for only one cut next year, he did open the doors to roughly $40 billion in short dated treasury purchases starting this week, to ensure “adequate liquidity” in the banking system.

Some folks are calling this start of some sort of QE again- this is not Quantitative Easing in the traditional sense; if this were to be a proper QE, you will be looking at the FED purchasing a boatload of longer dated bonds. Which is not to say it will not come, it was not to be today.

Predictably the President was not happy with the cut, calling Powell and his team “deadhead FED”, and demanded that the cut should have been “atleast twice” of what it actually was. The President has also urged the stock market to keep going up, and believes the US can grow per year at about 20 to 25% from the current sub 3% slog.

As far as the emini levels go, as called in my chat room update below from Tuesday, we staged an 80 dollar rally from that support level I shared and retreated after hours to settle into 6870, after running into selling at 6908.

This is in-line with the Weekly post calling for atleast some resistance kicking in at 6900.

So at this point, what you have is another cut today, you probably have a very dovish FED next year, and now you have what some are arguing a brand new QE— these are the knowns. What you do not know is how much of this is actually already priced in at close of 6870 today.

Let us give the bulls a benefit of the doubt in the session tomorrow and let us assume they can defend 6850 or so tomorrow. What is it they need to do next for this market to trade higher into 7000 and beyond?

A couple things.

Scenario 1: For the bulls to remain bid here above 6900, I think they need to hold 6850 tomorrow as potential support to target 6903.

Scenario 2: 6903 remains resistance unless overcome. So this means our edge case remains either we breakout above 6903 for bullish continuation or we break lower below 6850 for another raid into 6800.

In my view, despite the headlines that this was a hawkish FED, I think this was a very dovish FED today. A bunch of rate cuts here can help revive some sectors, specifically it can fuel the banks and AI related companies, but know that in some area like construction and services, inflation is picking up due to policy around immigration where such labor tends to play a major role. Despite such dovishness today, if we cannot take back 6900 handle in next couple of sessions or so, I think we are headed lower into 6750. A weekly close below 6750 can be painful.

To avoid this, I will like to see the close between now and Friday above 6903, not below it.

~ tic

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