June 25, 2008
Investors and traders alike were jumping on the bandwagon leading up to the FOMC statement, expecting a positive reaction on Wall Street from its release. But after an initial run-up in price, the markets spent the remaining portion of the day retreating.
It was an amazing balancing act by the Fed in that neither economic worries or inflation references sank the market, and while the market’s initially rallied on the Fed statement, investors weren’t gullible enough to believe that all of the problems facing the economy were as rosy as depicted by Team Bernanke.
One interesting thought though is that the Fed didn’t necessarily close the door on future rate cuts, which is interesting since Wall Street has begun to accept the idea that rate hikes may be in order come the next Fed meeting in August. If Wall Street picks up on this dovish tone we could see the rally that we failed to get today.
From a technical standpoint, volume was light which is surprising considering the news events of today’s market. In fact the NASDAQ, the day’s best index, had less shares exchange hands than the day before. A clear signal that the buyers, despite the +1% rally in the index is still hesitant to put any large amount of capital to work.
Here’s the NASDAQ and S&P Charts…