The Market Will Mini-Crash Into Fed Day

Discussion in 'Trading' started by Pa(b)st Prime, Sep 9, 2007.

Will Stocks Get Creamed This Week?

Poll closed Sep 11, 2007.
  1. Yes

    20 vote(s)
    46.5%
  2. No

    23 vote(s)
    53.5%
  1. dhpar

    dhpar

    well the stops may be taken out on 18th only if the fed cuts - not exactly my expectation.

    if they want to cut 50 why they still talk tough now? and frankly the economy does not look as weak as many bashers are suggesting.

    why to cut 25? this time it really does not matter what they put into minutes imo. if they cut then they cut and talking the talk becomes irrelevant. do they want to risk inflation fighting credentials (1 day before CPI) and plunging dollar for 25bps compromise with equity markets? I doubt it.

    Therefore the best strategy is to keep fed funds stable. they can cut on October by 50 if really needed - at that time they will have all data they need and if they are weak the dollar will be crippled by that time already anyway.
    they may cut discount window on 18th but likely only by 25 as they need to keep some distinction to fed funds - after all the collateral is different - and keep some slack.
    This strategy possibly makes them huge winners if economy turns to be ok. It would have serious implications for dollar, long bond, curve shape, long term inflation expectation etc.
    Ther is of course some risk of embarassement if the economy tanks - but they can at least say that they were serious about inflation and unbemployment was low at the time.

    now what happens with ES if they do not cut? personally i believe that's the only scenario how equities may end up going up (maybe after the first day 1-2% selloff).

    cheers
     
    #11     Sep 9, 2007
  2. there will be also futures rollover, so price memory wont be as strong at first.

    dec's are already at 1470 or so.
     
    #12     Sep 9, 2007
  3. Me.
     
    #13     Sep 9, 2007
  4. concur
     
    #15     Sep 9, 2007
  5. the current cycle was engineered because US paper was getting harder to sell overseas, bonds were loosing value.

    US debt load, couldn't handle higher rates, plus the market wasn't giving room for the FED to cut rates, and inflation pressures were building up.

    now the FED has a ideal world. Bonds are being gobbled up, and inflation pressures have eased with the fear.

    and now they have an excuse to cut during the coming election cycle. When Spooz were at 1560, study the chart patterns. The equity markets were broken on purpose.
     
    #16     Sep 9, 2007
  6. ddog

    ddog

    Right then.

    If I recall when you did this last time you found the sentiment to be bearish enough on this site to go long. Same thing now wouldn't you agree?
     
    #17     Sep 9, 2007
  7. won't happen
     
    #18     Sep 9, 2007
  8. Not at all.

    I find sentiment on this site and others to be eerily complacent.

    You'd think the markets closed unchanged Friday on light volume after a benign employment report. Little "crash" chatter. In fact little posting of any kind. ET has been DEATHLY quiet, for days.

    I'm not super bearish ST, I'll buy ES 3-4 points below Friday's lows or NQ around 14 below Friday's lows. For a scalp, maybe more. But in the larger IT or LT sense, there's been a sea change. The quiet before the storm.......
     
    #19     Sep 9, 2007
  9. ddog

    ddog

    Got it. Thanks.
     
    #20     Sep 9, 2007