Earlier, I wrote about how to trade if the Federal Reserve didn’t mention anything about quantitative easing. Well they did and they didn’t.
What I mean by this is that the Fed didn’t announce any additional easing policies, but it did announce that it would reinvest the proceeds from expiring mortgage backed securities into U.S. Treasuries.
Shortly after the Federal Open Market Committee (FOMC) made its announcement, stocks rallied off their lows, with the indices sharply pairing their losses. In the earlier piece was a sentence advocating readers to buy the S&P 500 ETF (SPY) and the Select Sector Industrial ETF (XLI) on a down turn.
Well that dip didn’t occur, and readers can still safely buy these ETF’s, as well as stocks that have been working recently, like John Deere (DE) and Caterpillar (CAT). Deere and Caterpillar also have additional catalysts upcoming, Deere reporting earnings on August 18th and Caterpillar having an analyst day the next day.
Any additional easing policies done by the Fed should lead to asset inflation, so stronger stocks should see buying activity occur before any of their weaker counterparts.
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