Analysis:
Today's Fed Announcement contains no surprise, and the market shot up briefly before settling lower. The Fed Announcement offers no sanguine picture of the economy but hints that the economy has veered towards the wrong track -- an inflation rate that is so low that the Fed may need to step in to pop it up, i.e., QE2. But since no Fed action is imminent, the Fed's assessment of the economy bears only bearish implication for the market. Looking ahead to tomorrow, the Initial Jobless Claims will stay above 450,000, and the housing data will bounce off historic lows. As the market continues to digest the Fed Announcement along with these data, it will sell off by the end of the day. In the next few days, the market will need either to close above 1,150 to confirm the resumption of a bullish trend or to close below 1,100 to scare off the retail investors who have jumped on the bandwagon in Sept. (Each time when bullish retail investors exceeded bearish retail investors by such a magnitude since 2006, the market has invariably declined.)
Strategy:
Hold short at 1,122
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