Posts filed under “Trading”

One & Undone?

As noted, markets liked the soft jobs data, believing it makes an end to Fed hikes more likely sooner than later.

However, as much as investors are hoping for a "One & Done" scenario, history teaches us its more like "One & Undone for the markets."

There is a disconnect here; We’ve previously observed that once the Fed finishes, markets do not perform particularly well (See [1], [2], [3] and [4]). I have yet to see a convincing reason not to see that pattern continue.

Just in case you found these four prior discussions wanting (!), here are two more analyses along similar lines to digest:

The WSJ’s David A. Gaffen recently quoted an analysis from Bianco Research. Jim Bianco found that over the past 5 Fed
hiking cycles:

“Stocks do well during the tightening period, and mediocre
afterward. The S&P 500 index rose at least 6% in four of the five
tightening periods, with the February 1994 to February 1995 period being the
outlier, when stocks fell 0.5%. By contrast, in the four post-tightening
periods, Bianco says stocks have done well twice, and done poorly twice. The
two poor periods were late 1987, when the market crashed, and mid-2000 to early
2001, when it slowly deteriorated; the good times were in 1995 and 1989."

That is consistent with prior studies; it also make economic sense.  The Fed stops once they see proof of the economy slowing, which typically suggests weaker revenues and profits for companies. 

Next up, we go once again to TickerSense, where Paul and Justin look at the Average Performance of the average SPX during a full Fed cycle:


Hence, the surprising reaction over the past year to any evidence the economy has slowed so much the Fed fears it must halt tightening. 

If you are a Bull, you should be rooting for ongoing hikes, which should mean a robust economy and ongoing earnings growth.

Once the Fed stops, the party is typically over for the macro economy.

Category: Data Analysis, Markets, Technical Analysis, Trading

One Two Three & Done (The Sucker Play)

Category: Federal Reserve, Fixed Income/Interest Rates, Psychology, Television, Trading


Category: Earnings, Psychology, Technical Analysis, Trading

Apprenticed Investor: Seven Steps for Handling Stock Tips

Category: Apprenticed Investor, Investing, Psychology, Technical Analysis, Trading

Scaling versus Averaging

Category: Apprenticed Investor, Markets, Psychology, Technical Analysis, Trading

Why Buy-And-Hold Strategy Doesn’t Work for So Many Investors

Category: Apprenticed Investor, Investing, Psychology, Technical Analysis, Trading

Sell Off on Light Volume

Category: Markets, Psychology, Technical Analysis, Trading

The Basic Tenets of My Investment Consciousness

Category: Apprenticed Investor, Investing, Psychology, Trading

Q puts, VIX calls

Category: Trading

Some recent trades

Category: Trading