Overall response to Fed’s announcement overnight was positive, with major stock indexes closed higher. In short, Fed indicated that tapering will come “soon”. Members have also pushed forward the timing of the first rate hike. The median dot plots showed that 9 out of 18 members projected it to happen in 2022.
Suggested readings on Fed:
- FOMC Review: Tapering will Start “Soon” while First Rate Hike may Come in as Soon as 2022
- FOMC Members Pull Forward Expectations for the Start of Rate Hikes Again!
- For the FOMC, Taper Requirements are “All But Met”
- FOMC Meeting Recap: Powell Projects A November Taper Announcement
- VOLATILITY ALERT! The Taper Is Coming
S&P 500 gained 0.95% to close at 4395.64. But it struggled to break through 55 day EMA (now at 4412.38). Near term risk will remain on the downside unless SPX could sustain above the EMA in the next few days. Indeed, a break of this week’s low at 4305.91 will further affirm that it’s already in correction to whole up trend from 3233.94. Deeper fall would be seen to 38.2% retracement at 4044.70 before SPX finds a bottom.