April 21, 2011

New Format for FOMC Day, Day Trading FOMC Day, Fed Day Trading Strategy

–          Federal open market committee
–          During this meeting…
o    The meeting starts on Tuesday  and ends on Wednesday
o    They raise/drop/keep rates the same
o    Take detail notes (‘minutes’)
o    And then they release it to the general public
o    Once its released day traders will now dig into the news that was released and try to make educated decisions based on this information
o    This is the BIG BOY of ALL news events
o    The meeting ‘minutes’ or ‘notes’ aren’t released until the following week
o    So all we get is the announcement
–          The new format follows the same as the European Center Bank
o    They have the meeting start and stop times are the same
o    They release the announcement @ 1230pm EST
o    Then have a press conference @ 215pm EST
o    We used to ONLY get the announcement @ 215pm
–          How is this different now?
o    Now we get the news earlier and then a press conference so the Fed can answer questions
o    They are trying to add more transparency
–          What will the result of this be?
o    Traders will be sitting on hands EARIER than normal, now the release is at 1230pm, not 215pm
o    Expect an earlier slowdown, if any volume comes in at all
o    We may NO LONGER be able to trade the morning session on FED DAY
o    We may now get an amazing set of moves from 1235 to 230pm EST
o    This may give day traders a chance to trade when they could not before
o    We expect day traders will at least try to day trade every word that comes out of our Fed’s Mouth during the news conference
o    With that assumption we also assume this will be nothing more than a big news events that we must avoid
o    Too sloppy, people making irrational decisions, etc.
o    Let’s wait and see how the first two Fed Day’s go, then we can make an educated decision on HOW to trade them.

——————————————————————————————————————————–

Chairman Ben S. Bernanke will hold press briefings four times per year to present the Federal Open Market Committee’s current economic projections and to provide additional context for the FOMC’s policy decisions.

In 2011, the Chairman’s press briefings will be held at 2:15 p.m. following FOMC decisions scheduled on April 27, June 22 and November 2.

The briefings will be broadcast live on the Federal Reserve’s website.

For these meetings, the FOMC statement is expected to be released at around 12:30 p.m., one hour and forty-five minutes earlier than for other FOMC meetings.

The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve’s monetary policy communication.

The Federal Reserve will continue to review its communications practices in the interest of ensuring accountability and increasing public understanding.

Thanks to David F. for sharing this with us! 

Looks like we are now getting a HEADS UP on the FED Release at 1230pm EST on FOMC Day.

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