NASDAQ led the major indexes on Friday October 26, 2007, gaining 53.33 points, or 1.94%, to close at 2804.19. The pulse of the market is speeding up as we approach the two-day Federal Open Market Committee (FOMC) meeting starting on Tuesday Oct. 30, 2007. The market is looking for a half-point rate cut to help out the credit crisis of 2007. The rate cut, if there is one, will be announced on the Halloween, the second day of the FOMC meeting.
Does it show strength in the market with a big rally in the NASDAQ three days before the FOMC meeting? Will Ben Bernanke the FOMC Chair, dress up like a bull or a bear on Halloween?
Q: What is the historical performance of S&P 500 Index (SPX) over the next five trading days in the fourth quarter when the NASDAQ is up more than 1.25% in one day, three days preceding an FOMC meeting; omitting any repeat occurrences within 10 trading days?
A: According to the 10 previous occurrences of this event, EventEdge indicates that SPX has shown a strong bullish edge that peaks three trading days after the event, this Halloween, when the FOMC is going to announce their rate selection. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Friday, 26 October 2007) is Wednesday Oct. 31 2007.
SPX rallies in 100% of the cases (10 of 10) by an average of 2.9% relative to the close on the event date. The overall return of the 10 cases is 2.9%, which, based on the close of SPX on the event date (1535.28), provides a target price of 1579.8 on Halloween.
If you would like to see more details of this historical edge, go to www.markethistory.com
HYPERLINK "http://www.markethistory.com/staff/detail.html?s=travis"Travis Nadelhoffer is an analyst with MarketHistory.com and an account representative with Logical Information Machines.
