Two weeks ago I mentioned that the Federal Reserve was in all likelihood watching the current market downturn closely, and would step in with renewed talk of continued liquidity if things got too dicey. Well, here they are — right on time.
Just as the Vanguard Total Stock Market Index was approaching the 200 day moving average (update of the chart from two weeks ago is below), the Fed released its latest meeting minutes indicating they will keep liquidity in place for longer than previously expected.Source: Vanguard, Morningstar
The result? A sudden upward surge in the stock market this afternoon. Thank you, Fed!
P.S. This is not how markets are suppose to work.