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Day One Of The Fed's Two-Day Meeting
Danny Riley
December 09, 2025
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Our View
S&P 500 Daily Moves Greater Than ± 2% Since Trump’s Election Victory (Nov 6, 2024-Dec 8, 2025)
I asked Grok to make a list of the jump in volatility since Trump took office in his second term, and it's my guess that this list will get bigger and bigger.
One of my best calls since Trump took office was that there would be increased volatility, and that it would continue right into the end of his term.
Since Donald Trump’s second term began, U.S. stock market volatility has increased compared to the Biden years. The $VIX has repeatedly spiked above 30, peaking near 55 in early April, driven by aggressive tariff announcements, trade wars, and policy uncertainty.
While the S&P 500 is still up around 16.81%, and the Nasdaq is up 22.10% year-to-date as of December 8, I’ve seen a lot of years with sell-offs late in the year — but this year has been far bumpier, with multiple sharp sell-offs and a six-fold increase in 2%+ daily drops versus 2023–2024.
Trump’s policies have brought back the higher volatility environment seen in his first term.
Our Lean — Danny’s Trade (Premium only)
Guest Post: Tom Incorvia - Blue Tree Strategies
Since November 26, the SPY has remained in a narrow consolidation band, with price action showing limited directional conviction. Such tight ranges typically reflect market indecision regarding the next potential swing move. From an analytical standpoint, a decisive break outside this consolidation zone is needed to establish directional clarity. Until then, market participants face a choice between exercising patience or applying short-duration, mean-reversion strategies within the range.
Friday’s session briefly improved the outlook, with trading sustained above the long-term balance area. However, Monday’s subsequent rejection of those higher levels diminished that constructive signal. The low-volume area near 676 remains a critical reference point. Maintaining trade above this zone would preserve the current balance structure, while a breakdown below it would increase the probability of a move toward the 660 region.
Tom Incorvia began his career in financial services in 1987 and has amassed over three decades of experience navigating the complexities of the markets. His career spans both the buy-side and sell-side of the trading desks, having served as Vice President of Equity Trading and later as General Partner of a hedge fund. This dual perspective has provided him with a unique and well-rounded understanding of market behavior.
You can purchase Tom’s Course on Volume Profile here.
Market Recap
In true fashion, the ES rallied up to 6893.75 on Globex and opened Monday — day one of the Fed’s two-day meeting — at 6885.75, up 9 points or +0.13%.
After the open, the ES rallied up to 6993.25 and then reversed as the NQ tumbled. After some flatline price action above the VWAP, it started getting hit by sell programs, pushing the ES down to 6848.50 at 11:00. It then rallied up to 6860.75 before dropping to a new low at 6841.00 at 12:25.
The ES popped up to 6863.75 at 1:00, sold off down to a new low at 6835.25 at 2:55, traded up to 6847.75 at 2:50, then down to 6840.00 at 3:35. It traded 6845.00 as the 3:50 cash imbalance showed $1.2 billion to buy, shot up to 6867.00, and settled at 6864.50, down 20.25 points or -0.29% from the previous close.
The NQ settled at 25,664.00, down 68 points or -0.26% on the day.
While much of the tech sector got pounded early, most of the losses were erased after a report that the Trump administration was going to give $NVDA the green light to sell the H200 chips to China. The late MiM buy imbalance also caught the shorts off guard.
In the end, it was a pre-Fed spook job.
In terms of the ES’s overall tone, the brunt of the selling was on the tech and AI side until after the 3:50 cash imbalance. In terms of the ES’s overall trade, volume was on the low side at 1.17 million contracts traded.
MiM
Market-on-Close Recap – MiM
The MOC auction opened at 15:51 with a strong $1.43B buy imbalance, driven largely by tech, communication services, and consumer cyclicals. The early surge showed a 61.5% positive dollar lean, but the symbol lean ran -54%, signaling that while dollars were concentrated in fewer, larger names, most symbols were actually skewed to the sell side — a classic sign of rotation underneath a headline buy imbalance.
From 15:51 to 15:54, buy pressure climbed steadily, peaking near $4.5B, while sell flows held between $2.1B–$2.3B, keeping the net imbalance solidly positive. But by 15:55 the auction tone shifted. The net collapsed to just $97M, and by 15:56 the imbalance flipped negative (-$30M) as sell pressure widened. This transition continued: at 15:57 the net hit -$354M, and into the final print it deteriorated to -$1.07B, ending the auction decisively on the sell side.
Sector flows showed where the rotation occurred. Communication Services (+86%), Technology (+82%), and Consumer Cyclical (+77%) carried the buy side. Heavy dollar inflows went into NVDA ($251M), GOOGL ($184M), TSLA ($142M), and AAPL ($140M). But Basic Materials (-58%), Energy (-67%), Financials (-66%), and Utilities (-79%) leaned sharply negative, indicating broad distribution outside of growth.
The sell side was led by NEM, PG, BRK.B, RVTY, MSFT, NEE, and XOM, each showing meaningful negative imbalances despite the early buy surge. The contrast between large-cap tech inflows and persistent selling in defensives and cyclicals reinforced the rotational character: dollars chased megacap growth, but symbol breadth pointed to a broader sell program.
By the close, NASDAQ still held a strong 88% buy dollar lean, but NYSE was firmly negative (-52.6%). The imbalance curve clearly showed buyers losing control after 15:54, with sellers dominating the final minutes.
Technical Edge
Fair Values for December 8, 2025:
SP: 6.88
NQ: 30.05
Dow: 45.31
Daily Market Recap 📊
For Monday, December 8, 2025
• NYSE Breadth: 38.56%
• Nasdaq Breadth: 59.79%
• Total Breadth: 57.26%
• NYSE Advance/Decline: 33.97%
• Nasdaq Advance/Decline: 44.79%
• Total Advance/Decline: 40.82%
• NYSE New Highs/New Lows: 86 / 39
• Nasdaq New Highs/New Lows: 200 / 100
• NYSE TRIN: 0.80
• Nasdaq TRIN: 0.54
Weekly Breadth Data 📈
For Week Ending Friday, December 5, 2025
• NYSE Breadth: 50.53%
• Nasdaq Breadth: 53.62%
• Total Breadth: 52.44%
• NYSE Advance/Decline: 48.46%
• Nasdaq Advance/Decline: 52.40%
• Total Advance/Decline: 50.97%
• NYSE New Highs/New Lows: 273 / 72
• Nasdaq New Highs/New Lows: 441 / 297
• NYSE TRIN: 0.90
• Nasdaq TRIN: 0.93
ES & NQ Levels (Premium only)
Calendars
Economic Calendar
Today
Important Upcoming
Earnings
Trading Room Summaries
Polaris Trading Group Summary - Monday, December 8, 2025
The trading day opened with cautious optimism but quickly turned into a grind marked by indecision, choppy action, and persistent bearish pressure. Despite early hopes for increased volatility and range expansion, Monday unfolded as a day of patience, selectivity, and important lessons.
Morning Session: Choppy Start, Caution Advised
PTGDavid and the team opened the day with key links, charts, and strategy guidance. Manny highlighted early that vol might not be suppressed and hinted at potential range expansion, favoring setup #4.
A long trade idea around 6880.75 was offered by Manny, and Bosier planned longs above 81, with adds at 87 and 89, but nothing materialized cleanly early.
David reminded the room that bulls must reclaim the 6870 handle, otherwise momentum may falter — which it eventually did.
Lesson: Both Manny and David stressed caution on Mondays — never go full size early, avoid "attacking" the open, and let the market settle. This mindset helped keep traders defensive and protected from early whipsaws.
Midday: Bear Pressure Intensifies
Bulls lost control after giving up 6870; David noted "it was toast for da bulls."
Manny salvaged a solid +7pt short on a textbook "lay-up" trade, offsetting his earlier -4pt scratch on Setup #3.
Multiple levels from the PTG Daily Range Calculator and Cycle Day projections were fulfilled:
CD1 low hit at 6836.25
Cycle Day 3 violation level and MoneyBoz confluence all tagged in the 6835-6838 zone.
Market chopped around these levels with no meaningful bullish response. David called out “no conviction” and “uninspiring rhythms.”
Lesson: Respect key zones. The confluence of multiple technical levels around 6835 created a magnet for price action. When bulls failed to reclaim broken support, the door opened for deeper value shifts lower.
Afternoon: News-Driven Bounce, Quickly Faded
Brief NVDA-related news spike (export chips to China) gave bulls a short squeeze attempt, reclaiming 6856, but it was short-lived.
David noted the move was "just another trap set to lure in the bait."
Both NQ and CL Open Range short targets were hit. CL hit TGT1; NQ hit all.
Manny waited all afternoon for a Setup #4 entry, which never came, echoing David’s reminder: “Hope is NOT a strategy!”
Lesson: Stay tactical, not emotional. Manny’s patience and discipline to not force trades was a standout decision. The NVDA pop reminded everyone to be cautious with news-based volatility — traps can be swift.
End of Day: Bears Dominate, Bulls Absorb
Despite a $2.4B MOC buy imbalance, the late-day rally lacked teeth and was absorbed quickly. Price returned to VWAP, ending the session with no meaningful upside progress.
David emphasized: “Wait all day for a decent move and all you get is the closing move @ the final bell... That is no way to trade.”
Highlights & Takeaways
Best Trade of the Day: Manny’s +7pt short on a clean setup after early scratch.
Key Level Respect: 6870 and 6835 zones provided major structure for the day.
Biggest Lesson: Mondays require patience and smaller size. Forcing trades or chasing early moves often leads to regret.
Discipline Wins: Staying out was sometimes the best trade — as David said, “You basically got paid sitting on the sidelines today.”
Market Mood Summary:
Bias: Bearish
Volatility: Gradually increased, particularly after NVDA news.
Structure: Key breakdowns followed by rejection of key reclaim levels.
Conviction: Low from bulls; bears had ball control throughout.
Solid read and adaptation by the room yesterday — with cautious, risk-aware trading prevailing over forced entries. Today’s setups will be clearer thanks to yesterday’s groundwork.
Discovery Trading Group Room Preview – December 9, 2025
Macro & Political Highlights:
China/Nvidia Deal: Futures steady after Trump approves Nvidia (NVDA) to resume H200 AI chip sales to “approved” Chinese customers. The U.S. will receive 25% of NVDA’s China sales under the deal.
Fed Decision Looms: FedWatch shows 89.4% probability of a rate cut at tomorrow’s FOMC meeting. Market reaction remains uncertain amid unclear future policy path.
Trade & Tariffs:
Trump unveils $12B farmer aid package, funded by tariff revenues, to offset trade war effects.
Threats of an additional 5% tariff on Mexico over water treaty violations.
USMCA exit is reportedly under consideration by the Trump administration.
Despite a 29% drop in U.S.-bound shipments, China posts record $1T+ trade surplus.
Economic Sentiment & Legal Watch:
Trump to hit the road amid poor poll numbers on inflation handling (CBS: 36% approve on economy, 32% on inflation).
White House investigating price fixing in the supply chain.
Justice Kavanaugh voices concern over FTC independence, warning of potential implications for the Fed.
Market & Technical Outlook:
Volatility remains moderate ahead of the Fed. ES 5-day average range: 51.75 points.
Whale bias: Short into the U.S. open on light overnight volume.
Trendline levels:
Resistance: 7278/83, 7408/13
Support: 6768/63, 6602/07, 6444/39
ES grinding higher, holding above 50-day MA (6781.50); trendlines remain in play.
Earnings & Data Watch:
Premarket: AutoZone (AZO). After-hours: Casey’s (CASY), GameStop (GME). Wednesday AM: Chewy (CHWY).
Key data today:
JOLTS (delayed) @ 10:00am ET
CB Leading Index (delayed) @ 10:00am ET
Tentative: ADP Weekly Employment @ 8:15am ET
