SPX Declines Into A Fed Day

Fed Days often generate compelling studies to consider and share in the nightly subscriber letter.  I have also covered them in the blog many times over the years. A Fed Day is one of eight days per year that the Federal Reserve concludes one of their scheduled meetings and makes a policy announcement.  Wednesday is a Fed Day.  Historically, Fed Days have had a bullish inclination.  That inclination has been even stronger when there has been selling heading into the Fed Day. The study below examines other times that SPX was in a long-term uptrend, but closed down for at least the third day in a row going into the Fed Day.

$SPX 3 down into a Fed Day has been bullish over the next 1-5 days

These are some very encouraging numbers for the bulls.  Below is the list of instances.

$SPX 3 down days into Fed Day - list of instances

The setup has certainly been potent over a long period of time.  There has not been a loser for the 4-day holding period since 1986.  And every instance back to 1982 has closed higher than the entry price at some point in the next 4 days. Of course anything can happen when it comes to the market, but evidence here suggests a substantial upside edge over the next few days.

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