Monday, July 15, 2013

Keystone's FOMC Congressional Oversight Twice-Yearly Bullish Market Indicator

The Federal Reserve must testify before Congress semi-annually (twice per year), typically in late February and also in July. The two-day stints in testimony typically result in bullish days for the markets, especially the last few years with Chairman Bernanke promising to drop money from helicopters indefinitely. Reference the Other Market Signals page for more information. The idea is to enter the market long the day before the first day of testimony and then exit the long trade the day after the second day of testimony. This results in an 80% success rate. The period from the day before the testimony to the second day of testimony is typically up strongly as well, and also the two-day testimony itself typically results in an up move from the first day to the second day, but the period that bookends the overall testimony from the day before, to the day after is the highest percentage move.

Note that the incorrect July 2007 number occurred just before the October 2007 market top, and the incorrect read in February 2008 is when the financials sector bubble popped so the markets were not in a good mood back then. The incorrect read last March 2012 was exactly as the markets were topping and rolling over. February's testimony this year, 2013, resulted in another up move for the markets. Chairman Bernanke has the magic touch; he is a rich uncle coming to town each time he testifies pumping the easy money talk. In addition, this week is OpEx where markets are typically bullish from a Tuesday low to a Wednesday high. Everything is going the bulls way these days. Does this mean that markets are guaranteed to go up this week? Nope. It simply means that the background current of the markets favor the bulls and if all things are equal, markets will float higher. Of course, other indicators such as the NYMO, indicate that markets are topping out right now.  Perhaps this week may show similar behavior to 2007, 2008 and March 2012?

7/17/13 - 7/18/13; House Financial Services and Senate Banking Committees
2/26/13 -- 2/27/13; 1488/1515; Markets are Up; Correct
7/17/12 -- 7/18/12; 1354/1377; Markets are Up; Correct
2/29/12 -- 3/1/12; 1372/1370; Markets are Down; Incorrect
7/13/11 -- 7/14/11; 1314/1316; Markets are Up; Correct
3/1/11 -- 3/2/11; 1327/1331; Markets are up; Correct
7/21/10 -- 7/22/10; 1083/1103; Markets are Up; Correct
2/24/10 -- 2/25/10; 1095/1104; Markets are Up; Correct
7/21/09 -- 7/22/09; 951/976; Markets are Up; Correct
2/24/09 -- 2/25/09; 743/753; Markets are Up; Correct
7/15/08 -- 7/16/08; 1228/1260; Markets are Up; Correct
2/27/08 -- 2/28/08; 1381/331; Markets are Down; Incorrect
7/18/07 -- 7/19/07; 1549/1534; Markets are Down; Incorrect
2/14/07 -- 2/15/07; 1444/1456; Markets are Up; Correct

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