If the fed sees inflation and housing cooling that means assets are going to go down in price. Energy and commodity based companies led the market up. both seem to be peaking. Therefore shouldnt the market fall. I'm skeptical that a rate cut will do anything to stimulate the economy because there isnt sufficient demand to keep spending
Right. Right. Right. There's no other game. I don't care what the "numbers" are. The economy is slowing. Asset's are on a hard reaction off the highs. Wage growth never did kick in. Sales are declining. IMO not only will there be at worst a prolonged pause in bias, this could very well be the end of the cycle. I'll be looking at some plays in ED futures and options to get a lotto ticket for a possible ease in Q1/07. In case it's not clear I agree with Risk. Stocks (for now) will catch a bid as this perception catches on with participants. I hate to say it but equities are cheap. Doesn't mean they can't get cheaper but I see a new all-time high on the near term horizon for the DJIA. That will be the last gasp......
Good call risk arb. Will you trade out of your position or hedge yourself in front of tomorrow? Im with Pabst that this is the end of the cycle.
After two days of chart action, it appears the Fed has not lost its cred with markets. Onward & upward they went... intraday buy signals on several dips (outside 11:30am ~ 1:00pm est) both days. The point I tried to emphasize here yesterday morning was <b><i>to not prejudge future price action based on prior market behavior.</i></b> It appears the majority of emini traders (faders = "the herd") tried selling every pause in their charts... all those bull flags & green surge candles mark their sell-exit stops. I personally found it hard to believe the upside had profit potential, especially in today's consecutive gap & bleed upward. But... when the trade signals are clear buys, trusting the charts and fading my nagging logic / emotions is usually where the trend truly is. Trade To Win Austin P
you are missing a very important part of macroeconomics... when the fed(central bank) stops raising interest rates free markets don't depress the prices of assets because the currency is now suddenly worth less - the exact opposite happens. In the equity markets this you see this in the form of stocks(assets) appreciating in value to regain their worth relative to where they were before the rate drop - this is why stocks are not money. although this is not always proportional, you will see assets that are not directly related to money appreciate due to a correction.(the more important thing to note in my rant is that equities are NOT money.)