While Fed Days have historically provided an upside edge, that edge has been substantially more powerful when there has been strong selling the day before. The last time I showed this study on the blog was 4/28/10. I’ve updated the statistics below.
Instances are a bit low, but they couldn’t get much more bullish. With a profit factor over 11 and the average trade about as positive as the worst trade was negative, risk/reward appears to heavily favor the bulls.
With the makret gapping up large this morning it may be too late to take advantage of this one. I did send a Tweet yesterday afternoon linking to the Fed Day studies where astute readers would have found this study posted in April of 2010. If you would like to follow me on Twitter you may do so at http://twitter.com/qerob