Wednesday, January 30, 2008

Pre-FOMC

The FOMC interest rate outcome will be released today around 2:15 pm (EST). It seems the market has already factored in a lowered 50 basis points. Whatever the outcome, the Feds will be having a hard time to please the market (it seems that they have been doing that for the pass few months).

If the interest rate is:
  • Lowered by 50 basis points, the market may react in unpredictable ways.
  • Lowered by less than 50 basis points, the market will slide again.
  • Lowered by more than 50 basis points, the market might slide again as the market might feel that economy is worse than it is perceived that is why the Feds lowered much more than what the market wants.

Should I play a Put, my stop loss would be highest point among the last 5-6 market days. The target is January low. Good sectors to short are the same: retail, housing, banks, mortgage lenders, etc. These sectors had rallied a fair bit since the January lows.

Trade with care as the market is still very volatile.

- PersianCat (Millionaire-in-progress)

Posted by PersianCat - Meooow !!! at 9:41 AM

1 comment:

Anonymous said...

It is unlikely that the Fed will cut interest rate.

Reasons :
1. The recent 0.75% is too much.
2. Some strong economic data released in last days.
3. The father cannot always give what the son asks.
4. When the interest was cut by 0.75%, the US Dollar Index RALLIED!!. This shows that the market does not think there will be further cut !!

Jan 30, 2008, 10:53:00 AM

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