I just recieved an email from a friend. We will call him Jerrome.
So here is what he wrote:”… just waiting to see if they change interest rates. If I understand if they go lower on the rate then the market will continue to be bullish. Am I right?”
The reality is that todays traders are actually bullish on the rumor that the interest rate will be reduced, so the markets initial reaction was bullish. However, when it does actually happen, does the market actually remain bullish. It likely may be bullish very short term, but intermediate and long term it is not bullish historically. Here is a prior post explaining this in 2015.
So, if the Fed is lowering interest rates at a bottom, it is bearish in the long-term after a likely emotional reaction. The public is simply not aware of historically accurate economic realities, Do not alter your defensive mindset.
InterAnalyst has been serving investors globally since 1990. Authoring hundreds financial articles and publications, thousands of trading charts to investors worldwide.