Wednesday was Fed day, and as anticipated, it took the on a wild trip.
The preliminary knee-jerk response was decrease, however as I warned readers, this primary transfer is usually deceptive, and we don’t need to leap aboard something too shortly. Right here’s what I Tuesday night:
Don’t leap on the primary knee-jerk response Wednesday afternoon as a result of it usually goes within the fallacious route, however it gained’t be lengthy earlier than the market can not conceal its true intentions and it begins the following multi-day transfer. If it’s up, purchase it. If it’s down, get out of the best way…
As soon as Powell bought a couple of minutes into his , a wave of aid spilled over the market, and costs went from -1% to +1% as concern of the worst went flying out the window. Which additionally wasn’t a shock, once more quoting what I wrote Tuesday night:
As for what comes subsequent, latest positive aspects depart the market susceptible to a slip if the Fed doesn’t say the entire proper issues. However as soon as we work our method by that volatility over the following few classes, I count on the “much less unhealthy than feared” rebound from the October lows to proceed. The one query is that if it continues from 4,100, 4k, 3,900, or 3,800. And whereas I think about myself bullish, the dealer in me would like to see this fall to the decrease finish of that vary earlier than bouncing.
Properly, sadly for us, Powell stated all the proper issues Wednesday afternoon, and I didn’t get fortunate sufficient to purchase huge reductions from impulsive and panicked sellers at a lot decrease ranges, however such is the market.
Typically it provides us nice buying and selling alternatives, different instances, we now have to accept good. This occurs to be a kind of good instances.
Whereas it’s simple to parse the Fed’s assertion to justify why the market rallied on the information, there are simply as many causes shares might have fallen on the exact same assertion. As has been the case for some time, this continues to be a glass-half-full market and retains specializing in the positives.
If it needed to go down, there are greater than sufficient excuses for costs to fall. However by this level, all of the naysayers have offered, and as soon as they’re out, their opinion not issues.
If this market have been fragile and susceptible, Wednesday’s knee-jerk promoting would have accelerated decrease. As an alternative, provide dried up, and costs bounced on less-bad-than-feared. One thing that refuses to go down will ultimately go up. Count on Wednesday’s highs to get even greater over the following few days and weeks.