61.2% Chance of S&P 500 Gain on Fed Announcement Day

Charts, Commentary, News, Technical Analysis

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The Fed’s two-day meeting concludes tomorrow and it is widely expected to do nothing. May’s jobs report was significantly weaker than expected and was accompanied by downward revisions to March and April numbers. When that data was released, the U.S. dollar tumbled and the CME Group’s FedWatch Tool, that calculates the probability of rate increases at upcoming Fed meetings, also tumbled. Today, the tool indicates just a 1.9% chance of a rate hike tomorrow. So there will most likely be no increase tomorrow.

Prior to today’s FOMC meeting, there have been 67 scheduled meetings since January 2008. Of those previous 67 meetings, S&P 500 finished the announcement day down 26 times and up 41 (61.2% up). The worst S&P 500 decline of 2.94% was on September 21, 2011 and the best day was a 5.14% gain on December 16, 2008. S&P 500 average gain on all 67 days is a respectable 0.5%. Considering the recent history of FOMC meeting announcement days, there is a clear bullish bias.

In the above chart S&P 500 performance 30 trading days before and 30 trading days after the last 67 FOMC meetings has been plotted alongside the last 30 trading days performance. The baseline is all 67 meetings with all positive announcement days and all negative announcement days grouped separately for comparison. S&P 500 has followed the path of “Up” announcement days prior to the last few trading sessions which suggests further weakness could follow tomorrow’s announcement.

Read this article in its original format at AlmanacTrader.com


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Stock Trader's Almanac (1285 Posts)

Jeffrey A. Hirsch is Editor in Chief of the Stock Trader’s Almanac. His latest book "The Little Book of Stock Market Cycles" (Wiley) was published in August 2012. As a frequent participant in the MrTopStep IM-Pro Trading Room, he shares trading insights with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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