The stock market seemed to be treading water on Monday and rightly so as the Fed is set to meet on Tuesday and decide on the important course of short term interest rates. Actually, the stock market is hoping that the Fed removes the measured language it has used for the last year or so. That way, the stock market figures the Fed is done raising rates and they can party on and get this market moving up again.
We are of the opinion that any change in the Fed policy statement will be viewed as positive by the market even though that enthusiasm will probably wane quickly. The way the market reacts on Tuesday will only be another clue in how the market will trade in the next year. Bullish sentiment persists even as the market has shown a fairly strong ceiling near Dow 10,950. Volume continues at a “measured” pace since Thanksgiving and there are many reasons that this rally is on its last legs.
We are in a waiting pattern until the Fed announces but we are firmly bearish this market at these levels. Even gold looks like it hit a top today falling sharply in the afternoon trading. The dollar seems to have fallen out of bed today too after trading in a nice 91 to 92.5 range for about a month, it fell to just over 90 today. The two markets should be trading opposite each other but both look like they want to go down right now, and go down together. We will see.
We’ll have more to say tomorrow evening after the news. Until then be careful and be selling any strength after the Fed’s announcement.
Dow Industrials: 10,767.77 -10.81
RYVNX: 18.50
TLT: 89.37
BGEIX: 14.66
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