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The Fed Leaves Rates Unchanged: Now What?

Here’s what Elliott Wave Int. had to say about the stock market today.  If you’re not familiar with EW theory, it is based on the premise that news doesn’t move the markets - social mood does.  And social creatures are moody.  - Ilene

The Fed Leaves Rates Unchanged: Now What?

Courtesy of Elliott Wave International

What an interesting day of trading we saw in stocks on Wednesday (Sept. 23).
 
All morning and early afternoon, the investment world held its breath waiting for the Federal Reserve Bank’s interest rates decision at 2:15 PM. The DJIA went mostly sideways: "Stocks wait," said the news.
 
At 2:15 PM, the Fed said "no change" in interest rates. The Dow moved higher.
 
"Stocks move higher after Fed announcement," said an AP headline. The Fed’s "assessment about the economy reaffirmed what the market has been betting on for the past seven months: that the economy is slowly returning to growth."
 
But after the post-news rally above 9,900, the Dow reversed and closed 81 points lower. Suddenly we had another picture for the day (source: Google Finance):
 
 
  • "Wall Street tumbles," said one headline, "…as investors reacted to the Federal Reserve announcement that it would maintain its stimulus program to nurture a fragile recovery."
  • "Stocks slide after Fed," said another, "…as investors took a sell-the-news reaction to the Fed’s decision to hold interest rates steady…" 
So, on the same day, we have:
 
1. A single event — the Fed’s interest rate announcement.
2. The stock market’s bullish — and — bearish "reaction" to it, and
3. Several news stories explaining why stocks rallied — and — declined after the event.
 
One question remains: Where will stocks go from here?
 
The mainstream media’s all-over-the-map explanations may sound convincing, yet they tell you nothing of value about the Dow’s future trend.

You don’t have to rely on them for your investment decisions. We at EWI know from experience that news doesn’t create long-term trends, despite what almost everyone believes. That’s why we look for well-established, repeating and predictable Elliott wave patterns in market charts.

****

EWI also sent me a Free Offer from Elliott Wave International - a 50-page eBook, The Ultimate Technical Analysis Handbook.  For those who wish to learn more about Elliott Wave Theory, this should be a good start.  EWI describes it as follows:

These handpicked lessons from [our] ebook series, Trader’s Classroom, will show you how to incorporate the most powerful technical tools into your own investment decisions. You’ll get lessons on:

  • Elliott waves
  • MACD (Moving Average Convergence/Divergence)
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  • Time Divergence
  • Setting protective stops with technical analysis
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Today more and more investors are warming to the fact that psychology moves markets and therefore fundamental analysis, which fails to properly measure mass investor psychology, must be flawed… 

Many investors who study Elliott wave patterns and employ other powerful technical indicators were — at very least — able to position themselves to survive the recent decline. Still others were able to turn crisis into opportunity and profit from the volatility.  How’d they do it?

Technical analysis.  Technical indicators remove the cloudy, bias-driven assumptions from your analysis and focus on the one thing that moves markets: investor psychology. Fundamental analysis fails to factor in the psychology that not only moves markets up and down, but also leads analysts to extrapolate the current or past trend into the future.

EWI’s brand-new 50-page eBook, The Ultimate Technical Analysis Handbook, will show you the various methods of technical analysis the EWI analysts use every day.  Even if you don’t abandon your fundamental indicators, you WILL benefit from drawing on these valuable technical tools.

Learn more about this free eBook, and download your copy here.

 

 


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Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!