The Last Fed Statement Was Important, What About This One?

• Posted by Greg Harmon
• on July 31st, 2013

Ahead of the June FOMC meeting I wrote This Fed Statement Should Be Important along with this chart. This was less about the content of the statement and more about a technical view of how the statements have impacted the intermediate trend. It turned out that it was important as the course of the market changed from a 3 week consolidation to a quick move lower. We all know what happened. Ben got fired. His Boss (well technically not his boss) told the world on National TV that Ben had f’d up and would not be re-signed when he became a free agent early next year. Uncle Ben then did his darnedest to break through the massive load of earwax that had built up in traders. Despite saying in plain English that he was not going to remove stimulus anytime soon, the market did not believe him. So it took about a bazillion speeches from him and writings from his intern (Hilsenrath) to turn things around.

Now we are awaiting the next statement. Will it have the same fireworks? I am sure it will be analyzed far beyond its useful value. But again what is more interesting to me is how the history of these statements have impacted the trend. Back to the chart, below is a close up of the past year. In it you can see that the markets are set up for a catalyst to move them again, flat at new highs. And if you shift your focus to the chart at the top of the page there is an interesting piece of data that comes out. Red lines almost always come in two’s. A red line again is a change in the intermediate term trend while the blue lines are a trend that was unaffected. Recent history would suggest that this statement will be important again. Are you prepared?

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