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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (15797)	4/12/2014 5:38:05 PM
From: Davy Crockett	1 Recommendation Recommended By John Pitera Respond to of 33421

The FED, the old saw was the 3 steps and a stumble... referring to interest hikes & fed tightening. Three Steps and a Stumble Rule A rule of thumb stating that the prices of stocks fall significantly after the Federal Reserve raises interest rates three times in a row. In a booming economy, minor adjustments in key interest rates, both up and down, are fairly normal. However, if the Fed raises interest rates three times in a row, this is taken as an indicator that it intends for interest rates to remain at a comparatively high level for the foreseeable future. This leads investors to sell stock, because the businesses underlying the stock now have the added cost of high interest rates, which reduces profits. The selling of stock causes stock prices to drop. financial-dictionary.thefreedictionary.com