FOMC Meetings

[brosin]

ORIGINAL --------1/25/10

LAST UPDATE --- 4/21/11...


CLIMBS ANALYZED IN BOLD


messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_D/threadview?m=tm&bn=87811&tid=507117&mid=507287&tof=4&frt=2
messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_D/threadview?m=tm&bn=87811&tid=507302&mid=526477&tof=-1&rt=1&frt=2&off=1



All about the FOMC meetings - always a drop right around this time, either before or just after. Notice where the pivot points have been with regard to these:

FOMC MEETINGS -

2009:


June 23-24.... Top was June 11th (956), moved sideways for a couple days, then would hit 869 on July 8 - 9.1% drop


- that leaves 25 trading sessions, and market went 869 to 1018 August 7th

- that is was a 17% run there, or an average of .5% or 6 pts SPX a day. 60% of the days were up, 15 out of 25.



August 11-12..... Top was Aug 7th (1018), no big drop, moved sideways into and after the meeting before small drop just after and then a resume upward. From the day after the statement through Aug 17, we went 1013 to 979 - 3.3% drop

August 17 to September 23, market went 979 to 1080 (10.3% gain)

- that was 17 up days out of 26 sessions (65%) from August 17

- initial 6% rise, 4% fall, and then a 8.9% rise to the 1080 high.



September 22-23...... Top was the 23rd (1080), peaked that day and then when the statement broke, we went from 1080 to a 1020 low October 2 - 5.5% drop.



This was an interesting period. October 2nd through October 21, market gained 7.9% 1020 to 1101. We topped out a good 2 weeks early with regard to FOMC. The market would interestingly enough **bottom** at the Fed meeting. It is unique in the sense that it is the only time the market had been going down going into a meeting.



November 3-4....... Top as mentioned was Oct 21 (1101), and by Nov 3rd* we would hit 1029 - 6.5% drop.

The market gained 8.2% in 11 sessions off that low (wow).

Throughout Dec, market has no volatility.



December 15-16........ Top Dec 4th (1119), but nothing really going on here, we were sideways on no volume from November through Dec 20 - Still brokeout a few days after the meeting.

2010:

January 26-27...... Top Jan 19th (also the 14th) (1150), from the 19th through Friday Feb 5th (14 trading sessions - wow), we went 1150 to 1044 - 9.1% drop.



March 16..... First made new high March 12 to keep the run of new highs before the meeting going. Alot of volatility after the meeting but we continued on (much) higher in the days to follow. Straight shot higher all the way to the next meeting.

NO DIP


40 out of 54 trading sessions coming off the low were up (74%) for 16.8% (1044 to 1220) or .3%/day for a slow grind higher.

- not even much of a mini retrace (only 2.3% over 4 day span), but only a few (13) of the up days have been 50-100 in the Dow. Quite a few (27) very small moves.


Volatility: THE BIGGER THEY ARE.....



April 27-28......... top April 26 (1220) and within 8 sessions, we would hit 1044 on 5/6 Crash Day for a 14% retrace (avg -1.8%/day).

The climb has been very volatile, much more so than any other rally. Within 4 sessions, on 5/12 the market would reach 1173 for a 12.4% gain (+3.1%/day). 9 sessions after that, 1041 was hit on 5/25 for -12.7% (-1.4%/day). In 6 sessions, the market would hit 1102 on 6/3 for 6% already (1%/day), but within 3 sessions on 6/8 it would retest 1042 for -5.6% (-1.8/day). From there we have moved back up 8.5% in 10 sessions to 1131 on 6/21.

Overall, the market has moved up .4%/day (8.5% in 18 sessions) off the 1040 5/25 bottom; there have been 10 up days and 8 down days.





June 22-23...........[/color][/size] top June 21 (SPX 1131) and corrected very fast to a low of 1011 on July 1st with heavy volume selling the last few sessions into the bottom. In 9 sessions, it moved -10.6% (-1.18% a day).


Thus far from the July 1 low, the market moved up 8.8% in 7 sessions to a 1099 high (1.2% a day) on July 13, and then back down to 1056 within 5 sessions - July 20 - for 3.9% or 0.7% a day. Within 5 sessions, the market would hit 1121 on July 27 for 6.1% or 1.2% a day.





August 10....... [/color][/size] top August 9 (1129) and within 12 sessions, we would hit 1040 on Aug 25 for a 7.9% decline (.6% per session).


We would hit 1041 again on Aug 31 after bouncing around for 4 sessions, but we would hit 1145 on Sept 20 for 10% in 13 trading days (.8%/day)




September 21.......[/color][/size] hit a new high Sept 20 at 1145 and touched 1149 the day of the meeting, and sold off for 3 days to 1123 (2.2%) before moving onto much higher highs. No further dip


Since Aug 31 at spx 1041, we went up 14% to 1198 by the Nov 3; in 44 sessions, we averaged .3% per day




November 2-3.......[/color][/size] market would hit a new high on Nov 3 at 1198, but would also make new highs on Nov 4 and Nov 5 (1227) before pulling back. Within 7 sessions, the market would hit 1173 for -4.4% (-.6% per day)


From Nov 16, the market would move up 6.2% to hit 1246 on Dec 13 (18 sessions or .3% per day)




December 14.......[/color][/size] market would make a new high on 12/13 at 1246, but would only pull back slightly before making newer highs and grinding up all the way through 1/6/11 to hit 1278

From Nov 16 at 1173 through 1/6/11, the market has so far moved up 9% in 34 sessions (.3% per day)


2011:

January 25-26...... - market would hit a new high on 1/26 at SPX 1301, but it would not pullback almost at all until hitting SPX 1344 on 2/18/11


From Nov 16 at 1173 through 2/18/11, the market moved up 15% in 65 sessions (.2% per day)


Next up..............



April 26-27......





Notice we have usually made a new higher high prior to the meeting's ending/FOMC statement...

Only 2 times it didn't happen was for the June and August 2010 meetings when the market would make a lower high.

[brosin]

As we are only about 2 weeks out, I will bump this. We would need quite the strong move to continue the pattern (still about 3% off the 1151 top). Maybe it will be like the September meeting top (topped the *final* day of the meetings). This would actually make sense seeing as that late Summer/early Fall drop was the other drop that "broke" all the charts.

In this case, I'd have to say I have a target of about 1170 SPX around March 17th - Happy St. Patty's Day?

[clearwaters]

Thanks for this information-I'd been wondering how much higher it was going to go. Karma for you!

[cosmic]

I picked it up for the Calendar Bros so On the Day it should show on people's main page.

[timber]

thanks brosin

[Rich]

That is some quality, 'out of the box' thinking, Bros.

Kudos.

[timber]

thanks

[benvestor]

Very interesting analysis.. I remember someone saying that there was a correlation between the full moon and the market cycles as well.
I put more stock in your association tho..

I also believe there to be a very strong correlation between market going down and Obama speaking formally to congress or the nation, especially when he speaks on Health care or Wall Street Reform. News of Major bills being passed or held up seem to move the market a lot now too.

I.E I believe the market tanked this last time (jan 19th) the day he was talking about the financial regulations on trade and Wall street.

Is it that when Bernake speaks and says the rate will not go up we see the market come back from the fear (selling pressure into the FOMC date)?
The loss in the market may just be because ppl are getting prepared for some rate increase and they know stocks might be overvalued when the rate rises

What was said in the FOMC meetings with your respective dates there, and what exactly where those dates?

It was a long day at school and i am feeling quite analytical, this seems something we could delve deeper into!

[brosin]

Feb 17, 2010 13:49:58 GMT -5 brosin said:

August 11-12..... Top was Aug 7th (1018), no big drop, moved sideways into and after the meeting before small drop just after and then a resume upward. From the day after the statement through Aug 17, we went 1013 to 979 - 3.3% drop

August 17 to September 23, market went 979 to 1080 (10.3% gain)

- that was 17 up days out of 26 sessions (65%) from August 17

- initial 6% rise, 4% fall, and then a 8.9% rise to the 1080 high.

I want to concentrate on this particular FOMC period since the July run was the one most comparable to this one (both the larger than average drop prior to it and the size of the move back up now)...

www.freestockcharts.com?emailChartID=6a263393-1887-439d-92cf-83e440c2b86b



The orange circles are where we get to the old high's resistance. I drew the upper channel line while ignoring the false break lows, and if you notice the blue circles, those are where the FOMC meetings are. The first time around, it got right back to that trendline prior to the meeting, fell a bit directly following the meeting, and then we went on to make 2 more new highs prior to the next FOMC meeting.

The timing is a little off this time around (we're a little behind schedule), but a strong move Monday > Tuesday midday could easily get us to that 1175/1180 area at the meeting in time for the short and swift correction at that point, only to go on to new highs afterwards.

From both sentimental and technical perspectives, I think there are enough similarities to put the odds at better than 50/50 that something along these lines is going to play out again.

[shipoffools]

Coincides with the FULL MOON on April 28th - hmmmmmm.......

[fundamentalidiot]

What was the average time span of the previous drops? When do you see this one ending?

[shipoffools]

Just in time for the NEW MOON May 14th.

[ukarlewitz]

Bros, this is very good. Thanks,

[novice08]

Thanks, bros. Wish I had seen that earlier, bought too much too soon this morning.

[brosin]

Ok time for an update here:

Top was April 26 of SPX 1220, low May 6 of SPX 1066, a drop of 12.6% thus far. Depending on where we drop to, we will need a 15-17% move from the low before the June 22-23 meeting. Last time, the run from Feb 5 low to March 12 new high prior to the March 17 meeting was 11% in just over a month. Going to need a similarly strong month to repeat that.

The banks will need to raise equity in the Summer, plus they will most likely start reinstating dividends, which are a few things that could start to cause the big money to push us back higher again.

The strange thing about this correction is that it seemed almost too easy to see coming - I had posted on April 27th that we had topped on the 26th already and didn't even consider that we would go higher (see my last update date on the original post).

Hopefully the bottom is just as easy to see as it was on Feb 5th when I know a few of us called it. Today shows some good signs but without some high volatility and signs of huge volume coming in, I don't think it will be for at least a week or so.

[brosin]

Updated the original post with the drop to 1041 and have now started looking ahead to the next FOMC meeting June 22-23.

At SPX 1100 here, we are 10.9% off a new high with 17 sessions to go. We would need a pretty strong move to get there (.6%/day), but given the volatility we had seen lately and how cheap some stocks are relative to what the market was pricing them at only a few weeks ago, it is quite possible nonetheless. I don't think 1250 is possible before the meeting, but I could see us at least retesting the waters near 1220.

[brosin]

The OP / Original Post is updated as of today's top.

The streak of new highs is going to be broken this time around. It will be interesting to see if it is later shown to be an anomaly or whether this - in addition to the irregular volatility - is the sign of distress. It is something to watch for sure. The FOMC meeting in March did not see even an intermediate top put in, and the market continued higher until topping at the April meeting. The sentiment going into this meeting is similar to March in that it is a very cautious optimism, so there are parallels. 5/6 Flash Crash day may have thrown a wrench into alot of things for a couple months, so let's see if not making a new top prior to the meeting becomes a pattern or if the old pattern will re-emerge in August.

[ukarlewitz]

Here's more on playing Fed days:
blog.afraidtotrade.com/link-quantifiable-edges-guide-to-fed-days/

[brosin]

OP Updated 7/8

I have August 10th marked as a top, but will it be a higher high or a lower high. 2 lower highs might be the start of a trend, whereas 1 lower high is not too damaging by itself.

[Hawk]

So brosnin are you more biased Long or Short till meeting?

[brosin]

Hey TruHawk - we tend to see a new high right around the meeting, so I would tend to say the bet would be to see a new high (higher than 1131) before Aug 10. So long biased for at least a majority of this week minimum, even potentially next Monday as well. It doesn't necessarily mean it's time to go short then either. The odds are in that it will be, but for the last few meetings especially, we have kept going up after as well.

It has only been 1 meeting now that it wasn't a *new* high, so I'm very closely watching to see if we see a higher one or a lower.

Notice for the past 2 meetings, the high is met only 1 day prior to the meeting, so August 9th would be that date if it happened again.



I take that back - it usually does seem to have been a pretty good time to have gone short. It's possible that 1120 was the high, but that's not quite as close to the meeting as many lately have been.

[Rich]

That was my thought also, Bros. If we get past 1132, 1150 is just a breath away.

[alphaspeculator]

August 10, 2010: The Next FOMC Meeting

Get short early.

[brosin]

Tomorrow is the moment of truth!

I will be the first to admit that my bullishness is put into question should we not get a new FOMC high. I *MAY* even say the new trend is down if that were the case.

*may*

My Grey Poupon is still ready for now.

[ask2lern]

Aug 9, 2010 0:20:31 GMT -5 brosin said:

Bump for relevance.

I will have a running 1 1 3 2 chant going at my desk through Tuesday's close if necessary.

Do you do that in your head or out loud?...................... ;D

[brosin]

Updated.

What was I thinking letting this wait so long... only 8 sessions to go before FOMC on September 21.

Let us see if we see a higher or lower high this time around (1129+ is what we are looking at for a higher one)

[brosin]

We did it!

Bear streak ends at 2 - or actually, only 1.3 since the Nas and Dow made higher highs last time when spx only got to 1129 (1131 time before that).

That is not much of a bearish trend

[brosin]

OP has been updated

[cosmic]

Bros the comments under Apr 26-7 for 2011 are horribly confusing to me.

[brosin]

Apr 21, 2011 12:05:34 GMT -5 cosmic said:

Bros the comments under Apr 26-7 for 2011 are horribly confusing to me.

Yeah after looking at it, I can see why! It's mainly because the comment

"Notice we have always made a (new higher) high prior to the meeting's ending/FOMC statement..."

has been there since the beginning.

When the June 2010 and August 2010 meetings saw lower highs, it put an end to being able to say "always" and I had to change it to say "usually"

After those 2 meetings in a row of lower highs in a row, the market has gone for new higher highs ever since.