Remeber that the market has gapped down and popped back up through the gap three times in the past eight trading days. That means that traders are refusing to give in to the Bears despite the news. Much of the buoyancy is probably related to the other-worldy rate cut that the Fed Funds Futures are pricing into the market. Right now traders are expecting a 100% chance of a 50bp cut from 1.00% to .50%.....and if that isn't enough, the FFF are pricing in a 72% chance of a 75bp cut down to .25%. I'm excited for the day when the Fed pays us to take the money off their hands.....or maybe not.....
Here is a chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
You can see the Hammer from Friday, coupled with the anticipated Fed cuts, is putting a bid under the market. Traders are acting as if they want to push the SPX back to the 918 - 920 area. I suppose if the rate cut is big enough, then the more myopic traders will try to push the market back up to the 950 area before anyone stops and considers just what that means. But like I always say, technical analysis is the observation of human behavior, so if the trend is up, you go with it. Never fight the tape.....
Just sharing observations:
ReplyDeleteLooks like markets are pricing in 75 basis points cut by Fed tomorrow: USDX is now down significantly from highs of 88 to 82 area now; hence Gold shot up $17 today.
Senior producers like AEM and GG spiked up this am to resistance areas holding thus far. Don't feel like jumping in at these prices but they sure have some momentum behind them. Perhaps once Fed cuts are official some profit taking might allow some buying opportunities.
Good trading all.
Francis