There is an interesting phenomenon after the FOMC meeting this year, quite different from that of last year.
On market opening of Wednesday, indexes moved in a narrow range, but as time drew near the announcement of rate cut, 3 major indexes surprisingly go back to zero rising on hearing the 25-base point cut. Everyone is waiting for speech of Powell. After the QE and QT policy, he is going to buy the debts again. That means the flow of money is abundant. AVGO and TSM broke record high on Wednesday and DJIA had record high on Thursday. NASDAQ retreated on Thursday market opening for IT stocks were over estimated and need to adjust even on good news. Market sentiment is mixed and waiting for Santa Claus Rally to come.
What is market aiming at? Besides the speech of Powell, it is the Dot Plot Chart. Some investors like to keep record of Dot Plot Chart and some has no such a custom. Why some people can have a deeper and more accurate than other people? Because they have full and abundant data! If you have a market diary and keep the Dot Plot Chart 4 times a year. I guarantee your analysis will be more accurate than a lot of people. For you will find the Dot Plot Chart is the most non accurate tool in the market among all popular data. It is very ugly in terms of accuracy. Poor Dot Plot Chart!
But why people still stick on it, simply they just reflect the market sentiment of the current time and not the future. If you want to know the future, better refer to Figure 1 of the Economic Projection on page 3. It is even more important than the summary of his speech on page 9.
All the way, I insist on referring to original data more than secondary data, summary of the report is secondary and original report is primary. Figures are more attractive than words after all. Market diary can be in any format, only if you know and understand the symbols, no need to let others to read and understand, but it must be concise and accurate.
In the Dot Plot Chart, no doubt this time they agree on the 25-base point rate cut, but for 2026, no prominent agreement can be seen. So, what should we do, refer to facts and figures of Figure 1, for experienced investors, they know that for the Economic projection, normally, they would put the most important thing first and then those comes after are of secondary.
Why I asked investors to refer to the situation of last year this period. There was a big black candlestick on the day of rate decision on Dec 18th 2024. Market stopped the rally of General Election and goes horizontally and went down in February. This time Dow Jones had two big white candlesticks and made record high. AI would not tell you the difference of last year and this year unless you told them to do so. Sometimes they are very stupid, if you do not tell them they may not initially find out more than what you want, just hope in the future they Super-AI can be more initiative.
Both AVGO and TSM are said to be the next NVDA, but it is too risky to buy on record high, can try those just having correction like NVDA. Meanwhile ALLW and BWX are rising from low, but it needs patience. TSLA will be a buying of 10 years according to the Pay & Performance scheme. It is a long-term project never happened in history. So, it needs a buying of 12 consecutive months for at least 8 to 9 years so as to get the average price of each year.
Now, the greatest problem does not lies in the market now, it lies on investors, for too many potential stocks and too little capital for buying.