STOCK INDEX FUTURES - DON’T FIGHT THE FED OR THE “GLOBAL CENTRAL BANK”


In the months preceding and the days following the November 3rd U.S. election traders have fixated on the political uncertainties and rightly so. There is an old adage that is as old as the hills.


“Uncertainty means lower prices.” That was definitely the case for the recent gyrations in stock index futures. However, there is another old adage, also as old as the hills, while remaining pertinent, it has been pushed to the background in the pecking order of market participants’ view of what fundamentals should dominate the direction of prices for stock index futures.


Chart 1: S&P 500 Futures - Monthly


THE ONE ADAGE THAT TRADERS APPEAR TO HAVE FORGOTTEN OR AT THE MINIMUM RELEGATED TO THE BACK BURNER IS THE “DON’T FIGHT THE FED” RULE OF THUMB.


The one adage that traders appear to have forgotten or at the minimum relegated to the back burner is the “Don’t fight the Fed” rule of thumb. This axiom that has passed the test of time for decades is based on the belief that investors may gain an advantage by investing in a way that aligns with the current and anticipated monetary policies of the Federal Reserve rather than trading against them.


Source: Chart from QST


22 | ADMISI - The Ghost In The Machine | Q4 Edition


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