The Federal Reserve provides a gold mine of both medium-term investment opportunities and short-term trading opportunities.

The Federal Open Market Committee (FOMC) holds eight regularly scheduled meetings every year. One of those is being held this week, with a rate decision set to be announced at 2:15 p.m. Eastern on Wednesday.

The chart below shows an investable pattern in the medium-term stemming from the decisions of the Federal Reserve. There are strikingly similar movements in the S&P 500 SPX arising from QE2, Operation Twist, and QE3.

There is much consternation about the stock market drop last Friday and on Tuesday. However, a quick look at the chart shows that, to some degree, the pattern was predictable.

Combining the medium-term stage of the market after a major Fed action and the tendency of the market around the FOMC meeting offers short- term trading opportunities. The chart below shows the S&P 500 Index with and without the 24-hour, pre-FOMC returns.

This chart shows that about half of the S&P 500 return is related to the FOMC action and can be captured with short-term trades.



The best way to take advantage in the short-term is to use broad-based ETFs such as SPY, DIA, and QQQ .

For the longer-term investor, the analysis is more complex but none-the-less doable by any astute investor willing to put in the work…Read more at MarketWatch

Subscribe to 'Generate Wealth'

Free Forever

More To Explore

30 Day Free Trial

Cancel within 30 days and you owe nothing

When you take a FREE 30 day trial, you get access to powerful techniques used by billionaires and hedge funds to grow richer. You can continue to use these powerful techniques to grow richer even if you cancel your subscription. You come out ahead by subscribing no matter how you look at it.

A fortune is to be made from AI stocks.
Get the list of 18 AI stocks to grab your share of the profits — no cost to you.

A fortune is to be made from AI stocks.

Get the list of 18 AI stocks to grab your share of the profits.

AI is a $1 Trillion Market

Making A Fortune
In Artificial Intelligence

Golden Age of Artificial Intelligence

Skip to content