Just How Bad is Bad?

Published on March 7, 2008

Just How Bad is Bad?

March 7, 2008

So the Fed has accepted the seriousness of liquidity pressures saying it will initiate a series of term repurchase transactions that are expected to cumulate to $100 billion. The Fed has already provided $160 billion in short-term loans since mid-December in six auctions. Stock futures jumped as soon as news broke, then just moments after it tanked. US payroll fell by 63, 000 and market futures tanked even further. At opening markets slipped, tanked, recovered and then tanked again, what a drama (call it nervousness)! Are you also forced to think just how bad is bad and when is that going to stop?

Markets are right now trading at lower than Jan 21 close and if it closes below that, it doesn’t spell good for the future. Be very very careful trading this market. While Gold and other metals, commodities are all up for the year, all other major indices are either close or down vs Jan 21 lows. The only index that is showing some positive signs is the Dow Transports. And if use principles of Dow theory, both needs to break the Jan 21 lows to continue the bear trend else it is not confirmed yet. We don’t know if it’s going to happen, my guess is yes, it’s going to happen.

Markets are now expecting that Federal Reserve will cut interest rates by 75 basis points in March 18 FOMC meeting. According to Marketwatch-

The April fed funds futures contract on the Chicago Board of Trade rose to 97.74 from a settlement Thursday of 97.69, with the most recent contract implying about a 96% chance of a 75 basis-point cut. On Thursday, the futures priced in odds of about 76%. Some analysts are now anticipating a surprise move by the Federal Reserve.

Read the story here. All this spells that things are not good, those are bad and how bad it’s anybody’s guess. The Bear rallies are brutal, one day its’ down, another day up, then down, then up….trade carefully.

Profitable trading, OP

One Comment

  • Avatar Franco says:

    OP,
    This is a very impressive performance during such a decline of the markets.
    Congratulations. I look forward in learning from your wisdom.
    Franco

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