FOMC; Fed Days

Fed Days are days when the FOMC (Federal Open Market Committee) make announcements on interest rates. These FOMC days usually see a low range and low volume day up to 14:00 EST when the announcement is made and then the day changes into a volatile high volume afternoon. The FOMC change (or leave the same) the Fed Funds Rate.


This is what the E-Mini S&P500 Market did after the last FOMC rate change announcement on 31 October 2007 when the FOMC cut the rate by a quarter point from 4.75% to 4.5%.

Here is a list of charts from the last 3 years of all the fed days from MyPivots.

http://www.mypivots.com/articles/articles.aspx?artnum=11&page=2

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I don't plan to have any open positions before the Fed announcements and will probably join the move in the making if my indicators confirm a safe entry. I have known people who bought 5 minutes before the Fed announcement on the last meet and emptied their account in the next 10 minutes even when the Fed cut the rates. The market becomes very volatile so special attention needs to be paid on thee days and don't go off fixing yourself a lunch with just a trailing stop in place.

For beginners trading the FOMC day, including myself, below is a video made by PureTick.com on playing the Fed move safetly.

http://puretick.com/video/fed/

Here are the pivot points for tommorow used by price-trend which are the closest to real floor pivot points.

PP: 1513.5 R1: 1533.3 R2: 1526 S1: 1506.3 S2: 1593.8

Update: 9:22 AM Eastern

On September 18 after a 0.5% cut in the fed funds target, the S&P surged 43 points. On October 31 after a 0.25% cut in the fed funds target, the S&P gained 18 points. The market has rallied more in advance of the announcement this time compared to the two previous occasions, however, so a subsequent rally of similar proportions is a long shot. There is even a chance that some "sell the news" reaction occurs following the announcement.