Overnight the US markets were rescued by the FED with all 3 major indices recovering the majority of Friday's losses. The markets panicked last Friday when FED official Rosengren indicated that an interest rate hike in September is possible see: US markets fall strongly over rate rise fears
On Monday it was a completely different story with the markets reversing and jumping significantly higher on FED official Brainard commenting that ..."the case to tighten policy preemptively is less compelling". After the comments were made the markets initially fell before reversing course and climbing for the rest of the trading day. See chart below for overall market reaction.
All 3 major stock indices reacted positively on the dovish comments by Brainard, with both the S&P 500 and the DOW jumping back above the support level that it fell through on Friday (see charts below). The NASDAQ 100 was not as lucky climbing to just below its previous support level of 4770 which is a bearish signal.
Lastly because of the reversal on Monday all 3 major indices are still within their up-trends that have been in place since February this year.
Who Is In Control?
Looking at the last 2 trading days and the sharp moves in either direction for the major stock indices and other markets, its clear the FED's attempt to gauge if the markets were OK and comfortable with rates rising, showed who really is in control of interest rate policy in the US. I can give you one clue its not the FED.
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I am a private trader and equities investor that loves the trading and investing world, following the markets and everything in between.