No surprises from the Fed, but the reaction was

Yesterday the Fed raised rates 1/4 percent as everyone expected.  The immediate sell off and lack of a bounce tells me that there were some people hoping for something more dovish.  The Fed seemed to keep the door open for more rate hikes.  Again, that wasn't much of a surprise, but there seemed to be a lack of positive news.

As I mentioned yesterday, there is a tendency for a strong move one way or the other after the announcement, to reverse at some point before a true direction is decided.  Yesterday's lack of any significant rebound was very unusual.

         

Still, a drop of .50% or more in stocks and a .50% plus rise in bond yields on the day of a rate announcement does tend to lead to gains five days later.  That stat doesn't come with a large sample size (just 5) so it's certainly not a slam dunk.

It sure has seemed as if I have missed the boat this year in stocks but in actuality, the S&P 500 closed lower yesterday than it did on January 11.  All of the S&P's gains came during the first 7 trading days of the year.  That was a surprise to me but it doesn't really tell the whole story as it has been the small caps and international stocks that have been the most impressive this year... again. 


                             Chart provided courtesy of www.decisionpoint.com

So the market has pulled back some again.  In the past this has presented decent short term buying opportunities.  I've missed them all, but the market keeps coming back down.  One of these times either the market won't come back down when there is a rally, or the buying opportunity will be a trap and we'll move lower.

The overbought/oversold indicator is now in neutral territory so that doesn't give us much to go on.  The one indicator that has been most accurate this year has been that OEX options put/call ratio which represents the "smart money."  They were getting more bearish.  See the March 23 comments for that chart.  I'll be watching this closely to see if they are buying this pullback or if they are staying cautious.

Did you get a chance to check out the new TSP Talk Blog?  Yes, it's basically these comments rewritten, but I am also able to make some intraday as well.  It seems to have some formatting problems that I will work on, but it still serves its purpose. 

That's all for today.  Currently 100% G fund.  Thanks for reading.  See you tomorrow.
 

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