Wednesday, October 29, 2008

Technical Picture - Post FED Analysis

The market held yesterday's gains and added some going into the FED statement. The expected 50 basis point rate cut was announced at 2:15 and the markets did what they do after every announcement that's already baked in... After things settled, prices moved nicely higher and the NASDAQ filled the October 21st gap. A late day bogus forecast regarding GE's 2009 outlook sent the markets into free fall. However, futures are trading substantially higher at this hour.

Usually the markets trade higher the day after a rate cut, and I suspect the same this time round unless the economic data is so bad that we retrace too deeply on the open. I'm watching the 20 DMA and I'm also watching if we will print a higher high as this would provide much needed evidence of a turnaround. So far, we are still in a bearish pattern of lower lows and lower highs. Not sure what will come first a higher high or or higher low.

FSLR trading up 15% on earnings - sympathy play ENER also up. Economic Calendar - Chain deflator, Adv. GDP, and initial claims in pre-market.

Open interest is bullish.

VIX is testing the trendline and carved out NR7.

As discussed last night, the dollar fell on the rate cut and gold/commodities rallied. Gold didn't hold the gains into the close. ABX reports in pre-market tomorrow. Oil carved out a bullish morning star reversal pattern. I expect the USD to retrace 38% -50% as depicted on the above chart.


John C. Lee said...

The most confusing market I've ever been in.

Jamie said...

Me too. Just taking it one day at a time.