The week prior to the Bernanke press conference yesterday, the S&P 500 climbed by nearly 3% from the lows to the high. In the 24 hours following the Fed meeting, it looks like the S&P 500 will lose 3% of its value. The Fed maintained its policy and will moderate quantitative easing as economic conditions dictate. The Fed remains committed to price stability.
Interest rates are hitting highs for the year and stocks are depreciating. There is clearly an adjustment process underway whereby investor expectations in both the bond and equity markets are being reset. The VIX is up 12% today to 18.71.
While it is uncomfortable during times of rising uncertainty and volatility, we recommend doing nothing today and giving the markets more time to sort the adjustment process out. We would rather wait for an investable trend than trade short-term volatility.