S&P 500 Futures (CME.SP) traced out a 'trend day' decline after the news of the 25 basis point interest rate cut, but don't expect that to be the long-term trend. It has been very rare that the Fed would cut rates when the S&P 500 is trading at 13-week highs, but in all eight of the previous occurrences the index has been higher 51 trading days later.
Q: How has CME.SP responded to a Federal Funds rate cut that coincided with a 13 week highest high?
A: According to the eight previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge indicates that CME.SP has shown a very strong bullish edge that peaks 52 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, April 30, 2008) is Tuesday, July 15, 2008.
CME.SP rallies in 100% of the cases (8 of 8) by an average of 6.3% relative to the close on the event date. The overall return of the eight cases is 6.3%, which, based on the close of CME.SP on the event date (1386), provides a target price of 1473.32.
To see this in EventEdge® click here.
HYPERLINK "http://www.markethistory.com/staff/detail.html?s=mickey" Mickey Schoenhals is an analyst with Markethistory.com.
