I have traded every single FOMC meeting this year (and I think I broke even on those days) and here is what I noticed:
With the exception of the surprise rate cuts, just about every rate cut turned into a rally off the open, sell-into-the-close scenario. However, the very last rate cut we had, it simply wasn't the case, the market sold-off before the meeting and rallied into the close.
Does this signify the turn of the overall bull/bear tide? I don't know, what I do know, is that I am more willing to bet on the opposite of the morning direction. That said, the first immediate move after the announcement is the true move (and if it is the opposite of morning direction, even better chance), but it is also the move you don't want to get into, as a violent shakeout to the other direction will usually hit, hard, and jumping into the first move will bring a swift painful death.
The key is the third move, which should be the direction of the first move (1-2-1 fashion), and that's the move to jump into. The problem is no one knows how big each swing is, I re-read my own trading journals over the past months and I have noticed that even when I knew what the market will eventually do, it was very hard to make money.
I will concentrate on banks and brokers tommorrow, lots of volatility in BKX/XBD on rate cut days, but when the news come out I will be a lot more willing to do tier 2/3's than tier 1's, but I will be very light until I see confirmation for the third move.
Another note, last Fed. meeting, a game which I was almost blown out, I noticed that in many major sector shake-out's, a low tier will often point toward the true direction. For example, when I trade OSX, SLB is the leader, but he shakes a lot, and sometimes I get more confirmation watching something like NOI or VTS, very small caps, but the specialist in those don't have to do major shakeouts, and often uses true supply and demand information to paint their charts. Those stocks are not worth trading, but they are worth watching. Last Fed. meeting I had AGE which trended the way it is supposed to trend all along, while all the big name brokers (GS, MER, MWD) did a lot of shakeout's, the key to victory may be a small cap or two.
Last but not least, I learned the hard way that a big move can happen as late as 3:20, last Fed. meeting I was long 3000 share's worth of various big-caps and I tapped out at 3:15 . . . Be light, as you will take some pain even if you are right, but it will be worth it if you can hold through the pain. (Of course, if you are wrong . . . )
P.S. Neo: Get out of the game before 2PM and watch.
Man , was Hitman right.... If only I jumped on the third move... OK, I watched today, quite an interesting day I must say. Dang , am frustrated, the best trending day and I did nothing.