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New Federal Reserve Style Screams Control



April 25, 2011 – Comments (0)

The market is trading with very light post holiday volume. The first trading day after a long holiday weekend is always light and today is no exception. In addition, the markets are all looking towards Wednesday. On Wednesday, a new FOMC Policy Statement release format from the Federal Reserve will debut. At 12:30pm ET, the Federal Reserve will release their policy statement. Then at 2:15pm ET, they will release some comments and minutes with a press conference immediately following.

The SPDR S&P 500 ETF (NYSE:SPY) is currently trading at $133.36, -0.42 (-0.31%) while the SPDR Dow Jones Industrial Average (NYSE:DIA) is trading at $124.35, -0.44 (-0.35%) and the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) trades at $58.36, +0.02 (+0.03%).

This format seems to be another way the Federal Reserve can control the markets. The initial release will be done during lunch when many traders will not be trading and volume will be light. The Federal Reserve will monitor the reaction over the next couple hours and decide what they then need to tell the markets in the press conference. Should the markets be selling sharply, you can bet some positive statements will follow. If it is up or neutral, nothing major will be said. For a Federal Reserve that continues to print trillions and use POMO to prop up the markets, this format should initially help them control and prop even better.

Gareth Soloway

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