Federal Reserve Tuesday

Well, Tuesday is a big day with the Fed making its petty little 25 bps bump in short term interest rates which gets even us a little lathered up. It used to be that Fed moves were done on a surprise basis but over the past year and a half they have been designed to not be a surprise. This semi-manipulation of rates serves to create an environment of “safety” to those who trade along the “curve”, giving everyone ample time to unwind from any difficult carry trade situations. Meanwhile, the financial system creates more and more credit and kind of ignores the Fed and its moves. The bond market has basically ignored rising inflation because…well we don’t know exactly but…the Fed has set up a no lose situation for bond traders by “fighting inflation” in their baby step fashion.

Enough ranting, but there really isn’t much to talk about tonight again as we wait for news on the Fed front tomorrow. I think the market wants to go down so maybe the move tomorrow will produce some down side action. Today’s downside action was attributed to the 7% spike in oil prices taking crude back up $4 to just over $67.

The precious metals were up strongly today but the HUI failed to go up in concert and our fund dropped a little today. The resistance at HUI 240 must be there. We will concentrate on this situation and keep you informed as to the near term direction. Ideally, we would see a modest pullback in prices and then find a good low to buy. But, we don’t always get what we want.

See you after the Fed’s bump. We advise caution after the bump because we might see a bit of volatility for a few hours of trading. We think the next move of consequence is down. Since the Dow is still in the 10,500’s we don’t see much upside. Hard to believe.


Dow Industrials: 10,557.63 -84.31
BGEIX: 13.18

PS If you are looking for Sunday evening's post, I accidentally wrote over it with this one. I guess the patting on the back was not supposed to have been done. Oh well. See you back here tomorrow.