Watch Out For The Semi-Annual Committee Meeting Chop

You remember the fear and trepidation of having to give an oral report. You knew your teacher was grading you and your peers were judging you. They were critiquing whether or not you had combed your hair, worn the right outfit or even prepared the report. The teacher was grading you based on the rubric designed to find out if you knew what you were talking about.

Most people don’t have to deal with this type of scrutiny very often. Federal Reserve chair Janet Yellen has to testify before the Senate Banking Committee on February 24, 2015, and will testify before the House Financial Services committee on February 25, 2015. She does this twice a year, and each time every little word is analyzed by traders.

She delivers her prepared remarks with a text version immediately made available on the Fed’s website. That probably causes a little pop in the markets right then. After the delivery of her speech, Yellen has a question and answer session. The session on Tuesday, February 24, ran for almost three hours. During this time, the markets can be very volatile and choppy depending on what she says.

The second day is the same thing, same person, but different questions could come out during the question and answer session. It is very important that you are aware that this is happening in the news. Don’t let it catch you off guard.

You can listen to or read what she says. You may wonder if what she is saying about raising the interest rates is raising the dollar value. Taking a quick look at some quotes shows that the dollar index is a little bit weaker and the bonds are up. You can go through each market you are watching and Monday morning quarterback it, but the main thing is to be aware.

Often times leading up to an important announcement, the market will just flatten out as it waits for what is coming. Then with the news release or the speech, the choppiness begins. If you are aware and prepared for this nice volatility, you can just enjoy it!

To take advantage of free courses and learn how to trade the news, go to www.apexinvesting.com, a service of Darrell Martin.