Fed Announcement Sends Stocks on a Wild Ride
As usual, the markets spent most of the day waiting to see what the Fed was going to do. The announcement didn’t disappoint as the Fed cut rates by 50 basis points, spurring the market to an immediate turn to the upside. After a brief pullback, the e-mini S&P contract (ESH8) got as high as 1387 before settling for a close at 1351.
On the chart, we see that the trend for 2008 has been to the downside. We had a brief scare for the bulls a little over a week ago when the market was down over 60 points, but that situation was remedied by the Fed's emergency rate cut of 75 basis points.
We are still below the moving averages. If the market treats this news as bullish, this could be an indicator that acts as a magnet. Also, we are just coming off of the 20 level on the slow stochastic, indicating an oversold condition. Tomorrow's action should be interesting in the wake of the Fed's latest move. At the time of this writing, the after-hours markets are down slightly.
Mike Tosaw, Director of Education
