I've noticed this apparent pattern since the Fed began raising rates last year. It may go back further.
The pattern is that the SPY close the day following the Fed announcement, i.e. Thursday, versus the close on the Friday (and the range of these) has provided a predictive edge for the pattern leading into the next announcement.
Category 1 (blue checks): In 5 of 10 cases, a positive or negative close has lead to a strong rally or decline, respectively, until the next time. These have been more frequent of late since the slowing of rate hike rhetoric.
Category 2 (purple checks): In 5 of 10 cases, the same close has lead to about a week of rally or decline followed by a reversal to the opposite side.
Category 3 (purple X): In only one case has the pattern completely failed, with the predicted decline leading instead to a rally.
The pattern suggests higher at least for this week. If it happens where there is a close below the low of Thursday at any point, then more weakness is likely to occur until the next meeting - even if it moves back above for some time.
However, note there is a coiled stochastic on the SPY daily. It is overbought weekly, although not monthly. Finally, it is at an annual resistance pivot and reacted strongly from there on the first touch, indicating it deserves respect. These suggest short term potential to the downside.
To me all of this suggests the following general approach for the next week to two months: be particularly mindful of the Thursday low but expect range trading pushing - at least - slightly higher for the next week. On any failure of Thursdays low, sell strength accordingly.
The pattern is that the SPY close the day following the Fed announcement, i.e. Thursday, versus the close on the Friday (and the range of these) has provided a predictive edge for the pattern leading into the next announcement.
Category 1 (blue checks): In 5 of 10 cases, a positive or negative close has lead to a strong rally or decline, respectively, until the next time. These have been more frequent of late since the slowing of rate hike rhetoric.
Category 2 (purple checks): In 5 of 10 cases, the same close has lead to about a week of rally or decline followed by a reversal to the opposite side.
Category 3 (purple X): In only one case has the pattern completely failed, with the predicted decline leading instead to a rally.
The pattern suggests higher at least for this week. If it happens where there is a close below the low of Thursday at any point, then more weakness is likely to occur until the next meeting - even if it moves back above for some time.
However, note there is a coiled stochastic on the SPY daily. It is overbought weekly, although not monthly. Finally, it is at an annual resistance pivot and reacted strongly from there on the first touch, indicating it deserves respect. These suggest short term potential to the downside.
To me all of this suggests the following general approach for the next week to two months: be particularly mindful of the Thursday low but expect range trading pushing - at least - slightly higher for the next week. On any failure of Thursdays low, sell strength accordingly.