Three Knee-Jerk Reactions to the Federal Reserve End of QE Announcement

The cross-market landscape reacted predictably to the end of the QE3 policy experiment and we’re monitoring follow-through from these initial movements.

Let’s take a look at three key markets and how they reacted to the expected news:

A quick, zoomed-in perspective shows a knee-jerk sell-off in Gold which was accompanied by a knee-jerk buying surge in the defensive TLT (Treasury ETF) and the US Dollar Index (seen here as the UUP ETF).

A broader perspective puts the knee-jerk reaction in context:

The Dollar surged as Gold collapsed under support.

US Stocks bounced around after the news but generally traded lower.

Keep in mind that the end of QE3 at the October meeting was not a surprise to markets.

Continue monitoring these typical movements – into Risk-Off areas – as the rest of the day develops and of course as we slide into the weekend.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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