58.5% Chance of decline on day after Fed announcement

Charts, Commentary, News, Stocks, Technical Analysis


In a surprising twist, the Fed did not raise rates today. Ok, I know it really wasn’t a surprise, but it seemed like there were more than the usual number of people expecting something from today’s meeting. About all that differentiates today’s meeting from all others this year was the number of decision dissenters, three. Other than this the board acknowledged the labor market is doing ok, but inflation is not quite at the desired level. In the end, the market responded positively to today’s inaction with S&P 500 closing up 1.09%.

In the following chart the 30 trading days before and after the last 68 Fed meetings (back to March 2008) are graphed. There are three lines, “All”, “Up” and “Down.” Up means the S&P 500 finished announcement day with a gain, down it finished with a loss. Down announcement days have generally been the best buying opportunity while up announcement days were often followed by weakness.

Of the last 68 announcement days, the S&P 500 finished the day positive 41 times. Of these 41 positive days S&P 500 was down 24 times (58.5%) the next day with an average loss of .32% across all 41 positive announcement occurrences.

Read this article in its original format at AlmanacTrader.com

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