Flat
Yesterday we saw what appears to be the calm before the storm.
The upcoming FOMC meeting to determine the Fed Funds Rate will
provide some fireworks for the market, but no one seemed to want to
make any major bets beforehand.
I am going to borrow a piece from
RevShark's
Around the Reef afternoon comments from yesterday. He hit the
nail on the head:
We have oil hitting a record
high, growing concerns over an impending recession and continued
hints that credit issues persist. Despite those negatives, the
indices continue to hold up extremely well.
That doesn't sound very
logical, but the reason for it is clear and simple. The Fed is
expected to cut interest rates next week, and the bears are
afraid to get in front of that event. Unfortunately, this Fed
rate cut is being anticipated to such a huge degree that you
have to wonder how well we can hold on to recent gains when the
news actually comes. The idea that a Fed rate cut will suddenly
solve all the negatives out there is naïve at best, and at some
point the traders who have been enjoying the recent ramp up are
going to change their approach and will look for opportunities
on the downside.
We’re looking for things to
slow down even before the Fed news. The sell-the-news on the Fed
decision is such an obvious trade that I expect that many won't
even wait for the news.
- RevShark
The market has held up well for the past several weeks, considering
the news. But what happens when the Fed cuts 50 basis points,
25 basis points, or does not cut at all? We have to be careful
- sometimes the market does the opposite of what you'd expect
because of a "sell the good news" or "buy the bad news" reaction.
It's a waiting game.
Chart provided courtesy of
www.decisionpoint.com
The I-fund was the winner yesterday as the dollar sunk to new lows.
It (the dollar) is due for a bounce, even if of the dead-cat
variety, so perhaps the C or S funds will outperform the I-fund in
the short-term.
Chart provided courtesy of
www.decisionpoint.com
The S-fund has been lagging and that could be because of the
uncertainty with interest rates and the credit crunch. Small
companies rely more on debt and they are less likely to business
overseas compared to their large cap counter parts who are taking
advantage of the strong global economy. Even the though we are
seeing a potential slowdown here in the U.S., the global economy is
still rolling along.
The
EbbChart System
is in the F-fund today. Check out the
EbbChart page to
see where it goes next. There has been a change to the
originally posted allocation for Monday.
Trader Fred's
TSP
Trader System
is in the F-fund today but we finally saw an up tick in the market
strength chart yesterday. That movement can be looking a week
or more into the future so it's premature to assume a buy signal.
Let's see how it progresses the rest of the week before we get too
excited.
Read more on the system
page.
We talked last week about the TSP considering either charging fees
for interfund transfers and/or limiting the number of transactions
we can make. Members on our message board have voiced their
opinion on this subject. A couple have written letters that
can be used to send to the powers that be, as apparently
4 out
of 5 TSP participants favor fees or limits. Of course
these are people who probably couldn't tell you the difference
between the G and F funds. Have a look on
this page
for the discussion in our forums. For the record,
although there are some great arguments against it,
I am not totally opposed to a small transaction fee for excessive
trading IF we can negotiate a transfer deadline closer to the 4 PM
ET market close out of them.
That's all for today. I am 100% F-fund - but I may follow the
Ebbchart's lead today depending on how the morning plays out. See you tomorrow.
Have questions? Visit our
message board
for answers.
Would you like to be on our
email alert list?
We will send you an email when there is a change to our asset allocation
or market outlook. Your email address will never be given out.
Read our
privacy policy.
By signing up you agree to the TSP Talk
Terms of
Service. More details below **.
Are you bullish or bearish?
Join the Weekly
Sentiment Survey.
Like what you're reading?
Tell a Friend
about us.
|
Printer friendly