COMMENT ON THIS WEEK'S FOMC MEETING (5:00 pm EDT)
We have yet another FOMC meeting this week (Tuesday and Wednesday) where the Fed will decide on interest rate policy now and going forward. Most analysts expect rates to remain unchanged this month, but there is some debate about whether or not the Fed will raise rates one more time this year - either in November or December. Economists and investors will also be scrutinizing this week's meeting for information about next year's policy plans. Many expect the Fed to start cutting rates at some point in 2024, but the question is how soon and by how much. With this kind of uncertainty about the future, the equity markets can be very volatile and prone to panic sell-offs as well as bullish bursts of irrational exuberance.
The Fed will conclude its meeting on Wednesday with a statement at 2:00 pm EDT most likely followed by a press conference with Fed Chairman Jerome Powell. Our current general reversal zone ends on Thursday (but we will allow it to extend into Friday). We will have to wait and see if the Fed's statement and/or Mr. Powell's rhetoric will trigger any major moves in the broad stock market. All three of our market indices (DOW, S&P 500, NASDAQ) made isolated highs last Thursday near the center of our reversal zone and have been falling from there. But if the Fed's rhetoric is dovish this week, we could see this market turn back up and a buying opportunity present itself. On the other hand, severely hawkish comments might trigger more selling.
It's significant to note here that once we pass through this week's reversal zone, there are no major reversal zones until November for any of our markets (except crude oil - near Halloween - Oct. 31). This suggests that any trend (up or down) established after this week will likely continue unabated for at least 5 weeks.
(UPDATE 9/19/23 - There are actually two general reversal zones in October - but they are weak ones - Oct. 5 -16, and Oct. 25 - Nov. 1. These could offer some resistance to any trend, but would probably not correspond to any long-term reversals.)
We have yet another FOMC meeting this week (Tuesday and Wednesday) where the Fed will decide on interest rate policy now and going forward. Most analysts expect rates to remain unchanged this month, but there is some debate about whether or not the Fed will raise rates one more time this year - either in November or December. Economists and investors will also be scrutinizing this week's meeting for information about next year's policy plans. Many expect the Fed to start cutting rates at some point in 2024, but the question is how soon and by how much. With this kind of uncertainty about the future, the equity markets can be very volatile and prone to panic sell-offs as well as bullish bursts of irrational exuberance.
The Fed will conclude its meeting on Wednesday with a statement at 2:00 pm EDT most likely followed by a press conference with Fed Chairman Jerome Powell. Our current general reversal zone ends on Thursday (but we will allow it to extend into Friday). We will have to wait and see if the Fed's statement and/or Mr. Powell's rhetoric will trigger any major moves in the broad stock market. All three of our market indices (DOW, S&P 500, NASDAQ) made isolated highs last Thursday near the center of our reversal zone and have been falling from there. But if the Fed's rhetoric is dovish this week, we could see this market turn back up and a buying opportunity present itself. On the other hand, severely hawkish comments might trigger more selling.
It's significant to note here that once we pass through this week's reversal zone, there are no major reversal zones until November for any of our markets (except crude oil - near Halloween - Oct. 31). This suggests that any trend (up or down) established after this week will likely continue unabated for at least 5 weeks.
(UPDATE 9/19/23 - There are actually two general reversal zones in October - but they are weak ones - Oct. 5 -16, and Oct. 25 - Nov. 1. These could offer some resistance to any trend, but would probably not correspond to any long-term reversals.)
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