Benny Pumps Up The Market

Happy Fed Day.....pre-market futures seem to think so anyway.....Fed Funds Futures are still pricing in a full 50bp cut to half a percent and a 65% - 70% chance of a 75bp cut to .25%. Traders hung around yesterday - not letting the market drop beyond critical levels - as they hunkered down for a nice meal of cheap money today.

BBY released earnings this morning that beat expectations. The stock is trading up over 10% pre-market and is likely to give the Retail sector a tailwind this morning.

About the only thing that could throw water on the short term excitement is a smaller than expected cut, or a catastrophic earnings report from GS, which is set to release numbers in a few minutes.

6:35 am MT: I just caught the beginnings of the GS report and it looks like the stock is trading up 5% - 6% immediately after the release, so the initial response is bullish. This sets the tone for a rally ahead of the Fed. I speculate that the SPX will open in the 880 area this morning and make a push. I won't be surprised by a move to 900 ahead of the FOMC announcement at 2:15pm ET.

Here is a chart of the SPY:
(click on image to enlarge)

6:45am MT: It looks like GS has settled in the plus 3.5% area for now.....

I speculate the market will move up ahead of the Fed and then do the usual volatile stuff after. At the end of the day, if traders get the rate cut they want from Benny, I won't be surprised to see the SPX in the 910 area, and perhaps higher. If traders don't get what they want then the market will drop back down to support levels, but may hold those levels based on the better than expected earnings reports from BBY and GS.

1:50 pm MT: If any of you ever doubted whether or not the Banks were trying to get inside Benny's head.....doubt no longer.....He's a Rock Star on the big stage.....he's the anti-Yoda.....and here's his theme song for the day:

Crazy Train:

Needless to say, I've been making hay with the "paper" calls on DIA and SPY today.....

4:00 pm MT: Market Wrap: Traders got what they expected, a wild, dramatic move by the Fed. The result was a big bounce in the market today. I speculated this morning that the SPX would move to the 910 area on “good” news (that’s a foofy term to me these days). Traders got their cut and the SPX closed at 913.....

The best case scenario for the current swing is a move up to the 940 – 950 area on the SPX by Friday afternoon. I had a couple of nice DIA and SPY “paper” calls today. On SPY, I picked up a 4% gainer before the Fed, and a 26% gainer after the Fed. On DIA, I picked up a 7% gainer before the Fed, and a 24% gainer after the Fed. I sold the last of the calls right near the high just before the close.

If the market doesn’t gap away tomorrow (which I don’t expect), then I will lather, rinse, repeat. We shall see how this all goes on Thursday and Friday.....

Here are some interesting Bullish Movers today:

Financials: PRU, MET, ALL, NDAQ, GS, ICE, STT, BEN, AFL, CME

Tech: LEAP, QCOM, PCLN, IBM, BIDU, FSLR

Railroads: NTRS

Retail: RL, KSS, BBY, ROST, RTH, AMZN, BBBY, GME

Drugs/Biotechs: GILD, MHS, GENZ, MCK, GSK

Chemical/Agriculture: MOS, BG, CF, POT (Energy and Commodities were not as exciting to me today)

Gold: AEM, NEM, GG, ABX (Gold is a bit extended short term)

Steel/Copper: NUE/FCX

Note: SUN is in an Ascending Triangle even though the rest of Energy is somewhat ambivalent. Also note that SPY, DIA, and the Q’s are bouncing.

I like the move in Insurance (Financials) and Retail the most, but there are a few other stocks that look interesting. I’m not looking to do anything tricky right now. If I see some nice intra-day setups off the current bounce, then I will speculate on that, but I’m not getting loaded up to my eyeballs. Nevertheless, there are some interesting bullish movers that might carry through for 1-2 days.

4:30 pm MT: One final note: I will be subbing on the AT Capstone tomorrow morning. Since I am teaching the class in the morning, I will be an hour late on the VC. I'm also taking Friday off, so I won't be doing the VC Friday.