Tuesday, December 29, 2015

Did The Fed Mess Up The Markets For 2015? Chance For Market Upside For Early 2016 $SPY, #in, #fed

*December 15th rate hike threw markets off typical patterns.
*Market typically seasonally strong in December.
*Multiple rate hikes priced in.
*Seasonal strength typical for January.

It's surprising that more wasn't made mention about the terrible timing of the Feds first rate hike in years. Historically the Fed and the government try to be extremely sensitive not to rattle the markets with news near year end. This year they showed no regard. The move clearly knew that sensitivity with weaker volumes and end of year positioning would cause higher volatility.
Nonetheless, the Fed raised rates mid December anyway. Implied in the move is that the Fed may have actually wanted some froth to come out of the market. If that was the intention, they were unsuccessful as the market, thus far, is holding fairly steady, despite the action. As we write this the S&P (NYSEARCA:SPY) is .40 off the December 15th close.

Two main 'take aways' on the Fed move:

1. Negative: This is likely a sign that the Fed cares less about stock market conditions and more about their policy equilibrium, which is somewhat worrisome. Past Fed administrations were extremely careful about market perception and reactions.
2. Positive: Despite that, the market holding steady could be a positive signal as we flip into a new fiscal year.

Important Level For SPY At 200

While the recent downtrend...

Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. 
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