Markets were rallying ahead of the Fed interest rate announcement on Wed Dec 19 2018. However the “Dovish” interest rate announcement came across as anything but Dovish. The Fed appears convinced the economy can handle the rate increases without the threat of a recession ahead. While Powell seemed to soften his stance back in November, on Wednesday he seemed right back to where he was in October when markets came unglued at his comments. Powell spoke of interest rates being on “auto-pilot” in 2019 and saw no need to change the reduction in the speed with which they were reducing the Fed’s balance sheet. They were no sentences that sounded dovish and left in the statement “further gradual” rate hikes. Aside from further rate hikes next year as it is obvious Fed Chair Powell is determined to return to 3% or 3.5% Fed funds rate, the decision to continue at the same pace for reducing the balance sheet is in more ways actually worse for stocks and bonds as quantitative tightening is in itself a form of raising interest rates.
Markets sold off within a minute of the interest rate increase but then started to rally until Powell started speaking at his news conference. That sent stocks plunging and the S&P broke through 2500 briefly. The final hour saw little signs that investors were willing to wade through the carnage and buy some stocks. The index closed at 2506.96, the lowest level of the year.
Advance Decline Numbers Outlook for Thu Dec 20 2018
Here are the market breadth indicator signals along with advance decline numbers from the S&P 500 Index and NASDAQ Index from the close of trading on Wed Dec 19 2018.
Members should review all market breadth signals before trading resumes on Thursday as there were significant changes again in the Market Breadth Indicator signals.
The market breadth indicator analysis and outlook is for FullyInformed Members.
Market Breadth Indicator – Advance Decline Numbers Outlook For Wed Dec 19 2018
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