IMCV - Don't Fight The Fed

• Nothing the Fed announced at its meeting last week was bullish, but that didn’t stop stocks from making new highs the very next day. Bulls have become so accustomed to new highs that they salivate whenever the market sells off more than a couple percentage points.
• Bulls bought the decline leading up to the Fed meeting and continued buying the day after, despite the bearish result. We believe this is part of a psychological phenomenon known as “anchoring”, which occurs when people become anchored to a belief that things will always continue to be the way they have been.
• Stocks were the biggest beneficiaries of the Fed’s easy money policy, so it makes sense to assume they could wind up among the largest victims of its opposite.

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