Home > Uncategorized > Fed Cuts Interest Rates

Fed Cuts Interest Rates

The Federal Reserve cut 50 basis points today to 1.00%, meeting the consensus forecast figure. Stocks had an unusual reaction to the news, first selling off, then rallying over 200 points only to fall 300 points in the final 30 minutes of  the trading day.  The Dow closed down -74.16 to 8990.96 below the critical  level of 9000. The Nasdaq closed in positive territory adding +7.74 to 1657.21 and the S&P 500 failed to hang on to gains losing -10.42 to 930.09. Crude oil rallied over 5 dollars today in the hopes that the rate cut will spur more spending. As always our traders took a step back in the minutes before 2:15pm EST as the fed made there announcement.  The moments following the anouncement are always very unpredictable and to trade then is one of the lowest probability trades available. Once the market settled in and the trin started to head down, our traders pounced on the long side of the market and rode their positions until we saw the ticks make a lower high and within seconds the markets started to fall to peices. The qqqq’s or nasdaq 100 fell .80 in a matter of seconds.  once we saw this we knew that the buying frenzy that had drobe the market up yesterday almost 900 points and another 200 in the afternoon today was coming to an end.  We waited patiently for the selling to subside and when the stocks started to rally a bit, we entered our short positions holding them until we closed out before the 4pm bell.

Due to the large amount of selling pressure that occured towards the end of day, we feel that the selling may continue into tomorrow.  Possibly a gap up open and then a sell off the rest of day.  The 900 point move on tuesday was significant and we may have come to far to fast. Yet we do feel that we have reached a bottom and if we see intra-day order flow to the upside we will get long, selling into momentum.  Until we cross over the 20 ma on the daily chart on the dow,  and comp, we will be less aggressive with the longs, and “we will sell when we can, not when we have to”

Keep the discipline!



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