Fed Making It Up As They Go Along
0
January 28, 2015

I wonder what economic and monetary model the Fed is experimenting with these days.

Their credibility is on the line and as the chart below demonstrates since they’re making things up as they go along.

1-28-2015 7-01-14 PM Unemployment

Other highlights from today’s Fed meeting include comments as Zero Hedge pointed out:

*FED REPEATS IT CAN BE PATIENT IN STARTING TO RAISE RATES

*FED SAYS ECONOMY HAS BEEN  `EXPANDING AT A SOLID PACE'

*FED CITES `STRONG JOB GAINS' AND LOWER UNEMPLOYMENT RATE

*FED SAYS INFLATION EXPECTED TO DECLINE FURTHER IN NEAR TERM

“So shrugging off the global tumult, The Fed appears set to raise rates no matter what to remove themselves from the corner they are stuck in, wary of what they can do when the next event hits home.”

In sum a fairly hawkish statement but maybe that’s just me since I slept through my money and banking class. In any event, the statement, data and logic are mystifying.

Bulls weren’t pleased and once the algos were clued-in the statement wasn’t dovish as they expected selling appeared once again. As of the close of trading markets were very weak overall.

Leading market sectors higher included: Volatility (VIX), Dollar (UUP) and Bonds (TLT).

Leading market sectors lower included: Everything else.                                                                      

The top 20 market movers by percentage change in volume whether rising or falling is available daily.

Volume increased with selling as markets closed on their lows. Breadth per the WSJ was negative.

1-28-2015 7-02-52 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPY DAILY

    SPY DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

    Pick3

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • XLV WEEKLY

    XLV WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • XRT WEEKLY

    XRT WEEKLY

  • IBB WEEKLY

    IBB WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • IYT WEEKLY

    IYT  WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB WEEKLY

    DBB WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • DBC WEEKLY

    DBC WEEKLY

  • EFA WEEKLY

    EFA WEEKLY

  • EEM WEEKLY

    EEM WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • FXI WEEKLY

    FXI WEEKLY

  • NYMO DAILY

    NYMO  DAILY

    The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.


     

  • NYSI DAILY

    NYSI DAILY

    The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

  • VIX WEEKLY

    VIX WEEKLY

     


    The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.


     

Up is down, down is up at the Fed now.

The key to this thinking is that despite the wrong-headed analysis by Fed FOMC voters the primary reason is they realize they must end what they’ve started.

If it takes some bending of the truth to get out of the corner they’ve placed themselves in then so be it.

Thursday brings Jobless Claims and Pending Home Sales once again. Friday is GDP data and that will be interesting. Bulls have a few days to save the week and January performance.

Let’s see what happens.

 

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Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.

He is the author of "Create Your own ETF Hedge Fund: A Do-It-Yourself Strategy for Private Wealth Management" published by Wiley Finance and "The Best ETFs: U.S. Equities, A Companion Guide to Building Your ETF Portfolio"



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ETF Digest

Market Summary
NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index 10 Year Treasury Note Yield Gold Bugs Index Morgan Stanley High Tech 35 Index Market Chart
Commodity Quote Change Change % NY
Gold1,257.00-27.30-2.13 %15:10
WTI Crude Futr44.620.170.38 % 14:33
Index Quotes Change Change % Local
CRB212.64-2.34-1.09 %14:47
US Dollar95.010.130.13 % 15:03
Index Quotes Change Change % Local
VIX19.43-1.01-4.94 %14:47
MSCI Value Daily MTD YTD
Brazil1803.547-2.46 %-1.57 %-1.57 %
Russia420.482-2.66 %3.84 % 3.84 %
India547.2220.54 %10.24 % 10.24 %
China68.768-0.07 %4.13 % 4.13 %