The Fed Moves

Today, the Fed announced, as it has for the past 11 meetings (or was that innings—extra innings) that it was raising interest rates 25 bps and that it would continue to raise at a measured pace. The market put on a brave face right after the announcement but soon fell off to close decidedly negative on the day. The market opened strong but couldn’t keep it going to long after the announcement and then the market went down. We did notice that the volume was pretty chunky.

Today’s Fed news did manage to hit the precious metal complex. As we have been mentioning in the past several weeks, the HUI should find some resistance near the 240 level and it did. Yesterday’s opening was a classic from our perspective. The metals and the mining stocks saw a big pop on a Monday morning and then both fell all day long. Today after the interest rate pop they tanked even more much to our dismay. We were hoping to get out of our mining stock mutual fund closer to the 240 range but it was not to be. After trading over 246 early Monday, the HUI closed near 233 today with probably some more downside to come.

With that in mind, we are trading out of the BGEIX for now. Whatever we get for it on Wednesday will be our exit point. Since we got in near the low for the year at 9.71, we think we will have a fairly decent trade. We are not abandoning BGEIX because we fully intend to get back into it when conditions warrant it. It was a fun ride since May.

As for the stock market, we like our early August high call. Right now there appears to be confirmation that the market wants to go down. As you know, we are keeping a keen eye on the housing arena due to that being the heart of the credit expansion. Today we saw another crack appear in that housing starts were lower than expected. Yes, they were still very high but the rollover may be in place. We look for much lower stock prices into next month—at least.

Have a good day.

Dow Industrials: 10,481.52 -76.11 (below 10,500)
BGEIX: 12.90