It was a year ago today that stocks turned around intraday when Bernanke said:
“If we see continued improvement and we have confidence that that’s going to be sustained then we could in the next few meetings … take a step down in our pace of purchases.”
The S&P 500 eventually fell 7.5% from the intraday high and sent a clear message to Bernanke not to taper. The Fed listened and didn’t taper until December, when the market was much better prepared.
At about this time that day, we warned about the brewing reversal. USD/JPY went on to fall 1000 pips in the next three weeks with AUD/USD falling about as much.
I pine for the days since we had that kind of volatility but if one thing is certain it’s that periods of low volatility make markets complacent and that leads to the biggest moves of all.
