Right On Time

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.

vti 200 longSource: Vanguard, Morningstar
 

The result? A sudden upward surge in the stock market this afternoon. Thank you, Fed!

day chart

P.S. This is not how markets are suppose to work.