Why We Can Safely Ignore Rate Hike Headlines

Wednesday was one other uneven session for the with the index spending many of the day within the crimson earlier than a late surge of shopping for pushed it above breakeven.

S&P 500 Index Day by day Chart

Shares picked themselves up off of the intraday lows after the Fed’s revealed they nonetheless deliberate on a March fee hike. Whereas this was per earlier Fed statements, some traders had been relieved the minutes didn’t comprise much more hawkish undertones.

Whereas that clarification sounds believable, the actual reality is everybody who fears rate of interest hikes has been abandoning ship since early January. And after six weeks of promoting, we’re working out of fearful homeowners that also have shares left to promote.

In some unspecified time in the future, everybody who desires to promote a headline could have gotten out. And all of these fearful sellers had been changed by consumers demonstrating an indifference to those self same headlines once they purchased regardless of them. And that’s the magic level when these headlines cease mattering.

Six weeks is a very long time and shares have lengthy since stopped falling on these identical recycled “fee hike” headlines. Which means it’s protected to imagine these headlines are priced-in and we not want to fret about extra of the identical. When the market doesn’t care, we don’t care.

Little doubt headlines can worsen and the Fed can blindside the market with a extra aggressive rate-hike schedule. However so long as the Fed sticks to their authentic plan, the worst of the promoting is already behind us.

As for Wednesday’s worth motion, this was a bullish reversal. A gap hole decrease failed to draw follow-on promoting and costs closed the hole and completed simply above breakeven. Bears had the proper alternative to interrupt this rebound and so they blew it.

If this market was really overbought and susceptible, costs would have fallen by now. A market that refuses to go down will finally go up. Which means January’s bounce is alive and effectively. Plan your trades accordingly.