How stocks may react to the Federal Reserve decision

How stocks may react to the Federal Reserve decision

We have one day or so to go until probably one of the biggest announcements of 2013 on the FED and their decision on whether they will start to taper or start withdrawing stimulus from the market.

How stocks may react to the Federal Reserve decision ....

That is a good question. Will the market react at all? Well I normally look at the charts for this, however for those that need a map laid out of them, it will probably go something like this.

1) A rally if expectations met:  Stocks could deliver a “buy the news” rally if the Fed meets expectations. Consensus forecasts call for a $10 billion or $15 billion cut in the Fed’s $85 billion in monthly bond purchases.

2) Pop then drop if taper delayed: If the central back holds off on tapering, some strategists see stocks rallying for a few hours, then selling off since such a decision would indicate the economy can’t yet handle a reduction in stimulus measures.

“There might be a short-lived pop, but I believe once the market digests it, (stocks) would then sell off,” said Doug Coté, chief market strategist at ING U.S. Investment Management, in a recent interview.

3) Sell off on a big taper: If the taper is larger than expected, stocks would drop, said Quincy Krosby, a market strategist at Prudential Financial, in a recent interview.

It does not really matter How stocks may react to the Federal Reserve decision . I do not really care what happens, as a moving market is all I need to profit, and with this major news that is exactly what is going to happen. So strap yourselves in.


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