Time for the FOMC "drift"!

28 april 2022 89
Elena_Berseneva
Elena_Berseneva

Listed among the best MarketCheese authors
1st in the segment "Indices"
2nd in the segment "Currencies"
3rd in the segments "US stocks" and "Oil and gas"
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The Federal Open Market Committee of the US Federal Reserve System (FOMC) will meet on May 4 at 9:00 p.m. Moscow time to decide on the key interest rate level. The meeting results will be presented at a press conference and in the commentary on monetary policy.

 

One of the MarketCheese research on the price movements of U.S. stocks and indexes before FOMC meetings was "Stock Market Anomalies: The FOMC 'Drift' Effect". It revealed the usefulness of FOMC "drift" in predicting the U.S. stock market.

 

The research found that the U.S. indexes (S&P 500 and DJIA) and most of the tested stocks are tended to rise 24 hours before the Federal Open Market Committee meetings of the U.S. Federal Reserve. In addition, a stronger rise is observed 36 hours before the FOMC meetings.

 

The S&P 500 and DJIA indexes and stocks of companies that have shown the highest average profit per tradetotal profitability and acceptable drawdown of no more than 20%, such as AppleAmerican ExpressVisa and JP Morgan, can be considered as trading instruments.

 

 

We will focus on the U.S. broad market index, which is the S&P 500.

 

In the current very difficult political and economic conditions, analysts at the Goldman Sachs financial conglomerate expect that by the end of 2022, according to optimistic forecasts, the broad market index will reach 4700, according to pessimistic forecasts it will reach 3600. At the moment, the index is trading around the 4200 with potential growth remaining.

 

  

Possible trading plan:

 

1. Buying the S&P 500 on May 3 at 9 a.m. Moscow time.

* Sale on May 4 at 8:59 p.m. Moscow time.

* Place the Stop Loss protective order below the minimum of the previous trading day, i.e. May 2.

 

 2. Buying the S&P 500 on May 3 at 9 p.m. Moscow time.

* Sale on May 4 at 8:59 p.m. Moscow time.

* Place the Stop Loss protective order below the minimum of the previous trading day, i.e. May 2.

 

 

Warning!

Financial market trading is inherent in high level of risk and can cause loss of investment capital. MarketCheese team is not responsible for the possible loss of your investment funds.

Elena_Berseneva
Elena_Berseneva

Listed among the best MarketCheese authors
1st in the segment "Indices"
2nd in the segment "Currencies"
3rd in the segments "US stocks" and "Oil and gas"
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