The Gilmo Report

July 27, 2022

July 27, 2022 7:01 pm ET

The crowd narrative heading into today’s Fed policy announcement has hinged on the idea that the Fed raises seventy-five basis points today, slaying the inflation dragon while deftly engineering a soft landing, and the stock market lives happily ever after. The market reaction to the Fed policy announcement today was based on that very idea, and the indexes kept shooting higher right through Fed Chair Powell’s press conference.

The NASDAQ Composite, building on a rally started overnight on not-as-bad-as-expected earnings from Alphabet (GOOG) and Microsoft (MSFT), jacked to a gain of 4.06% on slightly higher volume. Given the import of the Fed rate decision, I was surprised that the move did not occur on overwhelmingly strong volume, indicating that it was probably more of a melt-up than anything else.

 

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