The Wall Street Journal and other major media outlets reported late Thursday that the stock market reversed from crash to rally because the Fed had changed its tune on interest rate policy. The rationale was that traders started buying because the Fed will no longer stick to a schedule of ¼ point increases in the Fed Funds rate every 3 months. Instead it will take a “wait and see approach.”
As the Journal’s Nick Timiraos reported, the massive intraday rally was all the Journal’s doing.
“But as they push up their benchmark, they are becoming less sure how fast they will need to act or how far they will need to go, and they want to assess how the economy is holding up under moves they have already made.
How they manage this new, less-predictable approach will depend in large part on the performance of the economy and markets in the weeks ahead.
On Thursday, the Dow Jones Industrial Average tumbled as much as 785 points before paring those losses. The rebound accelerated late in the session after The Wall Street Journal reported on the Fed’s evolving thinking on rates.“
Aside from my usual LOL when reading Journal’s typical self-serving nonsense, as a technician I saw immediately why the market rallied when it did and where it did.
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