wheres wally wednesday, page-5

lalit, my read on the market action around the announcement is (1) there is always a kneejerk reaction immediately the announcement is made. Thats usually got nothing to do with the announcement but some computers generating some volatility and trying to catch a few traders out when the market is nervous. It means bugger all and 9 times out of 10 the market reverses the first move. (2) the market recognised that the fed was saying subprime isn't important in the overall economy, and trusted it enough to be making the right call. I think the market might have tanked if the fed had said it was lowering rates or whatever. (3) the currency markets have mirrored the spx in its action around the announcement, and the usd is now considerably stronger than preannouncment, suggesting that the fed speak was seen as an endorsement of the usa economy, and that rates will stay as they are. The bond market hardly moved last I looked, fell a fraction in price as it was expecting some fed capitulation to the subprime panic.

My opinion fwiw is that the announcement was bullish, and that spx reaction was also bullish on the session as a whole. The late selloff wasn't pretty, but the level that was tested and held into the close is significant. cheers!