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Strategies & Market Trends : TA Science Projects & Experimental Indicators
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To: HeyRainier who wrote (224)10/20/1998 3:14:00 PM
From: ftth  Read Replies (1) of 237
 
Hi rainier, if I look individually at each rate adjustment, and just the surrounding days, then yes, the "conventional wisdom" holds true much of the time. Although that's valuable info for day trades, the main argument of the conventional wisdom case is that as long as a Fed intervention trend persists, the market moves in anti-correlation to it because it's supposed to create a positive backdrop for stocks.

I'll post later and describe the market trend during each fed trend since 1987, but in general the conventional wisdom doesn't hold. But I guess that's not really surprising since we all know that no single factor has a persistent and consistent influence, and because the conventional wisdom would require that the Fed ALWAYS be right in the magnitude, direction, and timing of the intervention. Pretty unlikely when you consider the differing economic beliefs that Fed chairmen have held over time.

dh
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