Tug of War

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dow-aug-24-2007.pngThe markets are stuck between bulls and bears. There is no clear cut direction so far. Firstly, lets look at the chart-around 13,230 is quite a strong fib line and it has stuck there for a while after jumping high from Aug 16th low.

I don’t know if it’s going to go up or down (my bias is for up) but it’s an interesting time. If it goes too much up, Fed is not going to cut the rates and will leave markets to handle it by itself. Markets also can’t go too low as bulls know there is very high probability of rate cut. My personal bias is for uptrend as markets have digested all sorts of bearish news and it still hasn’t dipped below 10%. The moment there is a cut, we’ll see it trending-up. Earnings were not bad either and fundamentals are not bad (sure I don’t know how deep is sub-prime issue) so I am biased for up (but hedged for downside as well).

IVs are settling slowly, let it settle….till then, Profitable trading, OP  






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