Tuesday, January 30, 2007

Fed's Announcement Coming

Market Action:
We’re not really sure if there was any on Tuesday, the day before the Fed releases its newest position on interest rates.  The real action in the markets was in Oil as it rallied about 5.5% on the day.  This move created a stir in the oil service sector which rallied over 3%.  

If you pay attention to the indexes, the SP500 was the big mover due to the oil stocks in that index.  The Dow and the NASDAQ don’t have much oil representation so they didn’t benefit much from Oil’s move.  XOM (Exxon Mobil) is the only Dow component that is directly tied to oil and it was up a dollar plus.  

Normally, when oil moves like this, the Transports don’t like it very much but such was not the case on Tuesday as they rallied about 0.50%.  

Fed Watch:
This evening we are officially on Fed Watch (maybe they’ll lower rates this evening).  The market did remain calm on Tuesday somewhat due to the Fed’s announcement on interest rates on Wednesday.  

Our position continues to be that the Fed can Not raise rates and will not change them this week.  This “inaction” by the Fed may cause some muted buying going into the Friday jobs’ report.  As in our last post, we want to be aware of the possibilities for putting on some trades as we get to Friday.  

The rest of the year should give us ample opportunities to get back into some profitable trades.  The past couple of months have been very dull for us due to the market’s lack of any move.  Yes, all of the major indexes improved somewhat from their November highs but not enough for us to get excited about.  We think that is about to change.  

Dow Industrials:  12,523.31  +32.53
VIX: 10.96
HUI:  329.59
QQQQ:  43.63
RYVNX:   16.92
RYAIX:  21.40
RYCWX:  35.31
TLT:  86.82
BEGBX:  13.48

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