After this week's FOMC meeting concluded at 2 pm today, the Fed left interest rates unchanged. This was not a surprise, but many investors and traders WERE surprised by Fed chairman Jerome Powell's slightly hawkish rhetoric in which he squashed their hopes of an interest cut as soon as March. Powell announced that rate cuts would not be appropriate until there is "greater confidence that inflation is moving" towards the central bank's 2% target. Most analysts expect the first rate cuts to begin in late spring or early summer. Crestfallen traders led a sharp sell-off in the broad stock market following Mr. Powell's press conference.
Anyone reading this blog will know that we have been anticipating a sharp drop in equity markets no later than this week as the medium-term cycles in all three of our stock market indices (DOW, S&P 500, NASDAQ) are old and due to top out anytime, and this week is the end of a very strong reversal zone. Today the DOW dropped 317 points, the S&P 500 dropped 79 points, and the NASDAQ fell a whopping 346 points. This looks like the beginning of a fall to the final medium-term cycle bottoms (unless the market snaps back up tomorrow). We will be looking to buy at those bottoms, as long as the correction doesn't go too low. We would expect the final bottoms to break below the 45-day moving averages. For now, we remain on the sidelines as we wait to see if today's sell-off can gain more momentum over the next several days.