How to deal with Fed Day

Case Study-How to deal with Fed Day April 29,2009
Old post about Fed day
http://qqqmktanalysis.blogspot.com/2008/11/1029-summary-how-to-deal-with-fed-day.html

the classical action after fed:
Stage 1: whipsaw ups/downs
Stage 2: a fake move
Stage 3: real move normally oppsit to stage 2.

This worked well before BUT not last time that we had huge surprise as Fed decided print paper to buy bonds. that was such a surprise that mkt ran straight UP and never looked back below that fed day.

this time is normal, because mkt already expected Fed to continue buying bonds to save bond mkt, in turn will further weaken $USD.

If Fed announce more paper printing and buy bounds I will chase gold: Buy GLD, GDX, AEM EGO, CDE, AUY

TA_Wahaa said...
I did this since Mar last year. It worked most of time. My baby is (AUY)

QJ said...
as I said, unless $USD UP, EUR and OIL down, don't expect equity mkt down too much, so use UUP (DX), FXE (EUR), and USO (CL) as indicator, plus XLF, XLE and QQQQ as your reference if you trade ES. even daytrade, need watch them closely

QQQ said... April 29, 2009 7:04 PM
about mkt sense, it comes with a board view of all mkts and their relationship. I believe many people are still don't understand why mkt is up 3 digits, I know all of you reading this blog/comments knows clearly: it is because of $USD, and why post fed 10 points sell off? again because of $USD.
the first one was fear of fed announcement would crash USD, and the later was the fed announcement was unable to calm down bond mkt, and hence, USD jumped from 84.3's to 84.8's. and spx dropped 10 points. every move are in sync.

TA_Wen said... April 29, 2009 4:36 PM
Qj: I shorted @ spy~88.3 as I saw:
1. FED no action;
2. R3 = 88.36;
3. Price over 15min upper BB.
My plan was if it decisively moved beyond R3, I would cut loss.

I covered @ 87 as I saw:
1. Price touched 15min lower BB;
2. Price penetrated 5min EMA but got support @ 15min EMA (darn they r too close)
And so I finished a wining trade although I chose to stay on short side after FED.