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.
For our latest forecasts for the DJIA, S&P, NASDAQ, U.S. dollar, gold and more, read the just-published, September 23 issue of EWI's Short Term Update, part of this risk-free package.