Good Monday morning. Big week ahead with the FOMC meeting and Fed rate cut (93% probability; Polymarket) and the question that’s been on our mind since late last week; can this sharp move higher from the 11/21 lows continue, even as seasonality gets a bit muddy over the coming week and just as our major indexes (and market leading semis) have hit extreme overbought levels on stochastics (our leading short term momentum oscillator for the VRA Investing System).

First, the Fed meeting. While Polymarket has the odds of a rate cut at 93%, the CEM FedWatch Tool has the odds at 75%. Here at the VRA we’re much more in alignment with Polymarket, meaning that we look for the Fed to cut rates by .25% to an effective yield of 3.675%. The market also expects two additional 25bp rate cuts in 2026 (March and June). Again, we’ll be (very) surprised if they do not cut rates.

There are important questions that matter here; to appease inflation hawks, will Powell lean hawkish at his presser or wil...