Has the Market Fallen Out of Love With the Fed?

 | Jun 13, 2018 | 5:14 PM EDT
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The Federal Open Market Committee interest rate decision and policy decision didn't hold any major surprises but it did trigger three big market swings and some "sell the news" action.

The market couldn't quite make up its mind whether the Fed's slightly more hawkish tone was a negative but with the indices technically extended the path of least resistance was to the downside. It wasn't a major selloff but it was a change of pace from the usual celebration of central bank decisions.

It is important to keep in mind that if the market hadn't been going straight up for a couple weeks the reaction would likely have been different. The indices refused to sell off on G-7 and the Korean summit but the Fed decision today was just too good of setup for the bears to fumble once again.

Breadth was the worst in a while, with about 2,750 gainers to 4,200 decliners, but the pullbacks where minor and more than 400 stocks hit new 12-month highs before the Fed news produced the pullback.

The bullish spin on this action is that it was just a run of the mill pullback after a good run. There is no reason at this point to believe that it is going to produce protracted downside.

The bearish spin is that the market sold off on a Fed decision. That is something new and may indicate a new headwind that will present future problems.

Right now it is premature to jump to any negative conclusion. The market was overbought and it corrected a little.

Have a good evening. I'll see you tomorrow.

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