As we had expected before, even if Powell revealed the possibility of slowing interest rate hikes in the future at this interest rate meeting, it is likely that he will still firm his hawkish rhetoric and pour cold water on the bulls in the market.

At 2am Beijing time on Thursday, the Federal Reserve raised interest rates by 75 basis points as expected by the market. Subsequently, Powell stated at a press conference that it would be appropriate to slow down the rate hike at some point in the future, with the earliest possible slowing down in December. After hearing this statement, the Dow Jones index briefly surged above 33000 points.

But then Powell emphasized that due to the lack of signs of weakness in the labor market, the economy is still strong, and short-term inflation is higher than expected, which is a concern. Past history strongly warns against premature policy relaxation, as the peak interest rate may be higher than expected at the September meeting. This means that the Federal Reserve's federal funds rate may climb to over 5% next year.

Regarding the future economic situation, Powell's speech also appeared less confident. He stated that as interest rates continue to rise, a soft landing of the economy will become difficult, and it is unclear whether a recession will occur and how much negative impact it will have.

We can clearly see from Powell's speech that he has done a good job in managing market expectations, first conveying a signal of slowing interest rate hikes to the market, and then giving a blow to the current optimistic sentiment in the market, emphasizing that the current inflation situation is still severe and it is not time to take it lightly. This action has prevented the risk of price increases and prevented the previous efforts of the Federal Reserve from being wasted.

Due to the previous optimism being suppressed, the US stock market fell sharply after a brief surge, and the current price is running around 32200. In yesterday's article, we made it clear that the overall trend of the US stock market is in a downward cycle, and this round of rebound belongs to the tail end market.

After we have clarified the overall direction of the Federal Reserve, our current operational approach has gradually become clearer. At least from now on, the Federal Reserve will come forward to suppress the market when the mood is optimistic, and the risk of a recession in the US economic outlook is increasing after four consecutive 75 basis point rate hikes. The economic cycle from cooling down to recession is bearish for the stock market. Only when inflation approaches the Federal Reserve's target and there is a major recession can it reach a bottom. Therefore, the current strategy is mainly bearish when facing high.

The daily level Dow Jones index has suffered a significant decline under pressure on the downward trend, with a high probability of a rebound of 33000. The first target for the downward trend is 30000.