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Strategies & Market Trends : P&S and STO Death Blow's

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From: DebtBomb	9/21/2006 10:09:49 AM
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From another site: investorshub.com Fed and the market. It’s appropriate and instructive to look at other periods of rate cycles to get a sense of the market’s historical performance and probabilities this time around. There have been 15 final rate hikes by the Fed since 1920. According to Ned Davis Research, the median span between a final rate hike and the subsequent first rate cut is six months with a median return of -9.2% for the Dow over that period. So, be careful buying into conventional wisdom that a Fed out of the picture is unambiguously positive for stocks. Taking the analysis down a level, we can look at the historical tendencies for sector performance during the span between final rate hikes and initial rate cuts. Since consistent sector data does not have as long a history as data for the broad averages, the research dates back to 1974. Since then we have seen six cycles. In median return terms, the ranking of best-to-worst performing sectors was as follows: Financials 12.0% Consumer staples 10.2 Health care 9.4 Utilities 7.8 Telecom 5.7 Energy - 0.4 Industrials - 3.5 Consumer discretionary - 5.3 Materials - 9.2 Technology -12.0 Source: Ned Davis Research, with data from Standard & Poor

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