Sell the Yen Rumor, Buy the News

In the case of news, we should always wait for the sacrament of confirmation. --Voltaire

One often-stated line in markets is to buy the rumor and sell the news when it comes to trading on policy actions. The idea is that investors tend to position ahead of news, bidding up prices in an effort to reprice the future. Often, upon the actual news, traders sell in an effort to lock in gains. One very recent example of this has been the lead up to the Federal Reserve's third quantitative easing policy announcement. As certainty started to grow of another round of stimulus, traders in the U.S. began to buy the rumor, sending the SPDR S&P 500 (SPY) to the highs of the year.  Ever since the actual announcement was made, stocks have languished, falling off of their highs and hesitating ever since....297 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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