The Fed Does The Right Thing And Cuts The Fed Funds Rate By 0.50%
The Fed announced today that it was reducing its target for the federal funds rate, the interest that banks charge each other, from 5.25 percent to 4.75 percent. This was the right move because of the mortgage/credit crisis, and, because the Fed Funds rate was so far above short term rates (the market) recently in the 4% area. Apparently they left the Discount rate unchanged, but, I'm not certain of that.
SPX (S & P 500) took out what appeared to be the Wave B cycle high that occurred on 9-4-07, and, now has a clear Elliott Wave 12345 up down up down up pattern on the daily chart since 8-16 (countertrend Wave B upcycle), see http://stockcharts.com/charts/gallery.html?%24spx. SPX's Wave B might be peaking today. Today could be a big sucker's rally. Even if it lasts another day or two it's probably still a sucker's rally. This rally is probably basically a blip.
NDX (NASDAQ 100), so far at least, hasn't taken out the Wave B cycle high that occurred on 9-4-07, see http://stockcharts.com/charts/gallery.html?%24ndx. The Wave B cycle high that occurred on 9-4-07 may hold (edit: NDX apparently just took out 9-4's cycle high, but should soon enter Wave C). Today could be a big sucker's rally. Even if it lasts another day or two it's probably still a sucker's rally. This rally is probably basically a blip.
The 0.50% Fed Funds rate cut sparked a massive short covering rally today, that was on top of the program trading rally today that was underway due to massive Fed credit the past week, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
I believe that the July cycle highs for both SPX (S & P 500) and NDX (NASDAQ 100) will hold, and, will turn out to be Cyclical Bull Market cycle highs as expected, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
I feel that there's a definite possibility that both SPX's (S & P 500) and NDX's (NASDAQ 100) post rate cut rally may have already peaked, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, or, if not, will probably peak tomorrow.
The post rate cut huge spike/rally is probably a sucker's rally, and, both SPX (S & P 500) and NDX (NASDAQ 100) will probably enter Wave C of their major downcycle since the July cycle highs either late today or tomorrow, see http://stockcharts.com/charts/gallery.html?%24ndx.
There's a good chance that all this rally was/is was a very brief spike and then it's probably back to the Wave C that was probably in effect before the rate cut. Let's see how the next day or two play out.
I'm happy, the half point rate cut has probably created an even better shorting opportunity. There should be very good/even better (than before) trading opportunities for QID (UltraShort QQQ ProShares, http://stockcharts.com/h-sc/ui?s=qid).
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
....... http://www.JoeFRocks.com/ .
SPX (S & P 500) took out what appeared to be the Wave B cycle high that occurred on 9-4-07, and, now has a clear Elliott Wave 12345 up down up down up pattern on the daily chart since 8-16 (countertrend Wave B upcycle), see http://stockcharts.com/charts/gallery.html?%24spx. SPX's Wave B might be peaking today. Today could be a big sucker's rally. Even if it lasts another day or two it's probably still a sucker's rally. This rally is probably basically a blip.
NDX (NASDAQ 100), so far at least, hasn't taken out the Wave B cycle high that occurred on 9-4-07, see http://stockcharts.com/charts/gallery.html?%24ndx. The Wave B cycle high that occurred on 9-4-07 may hold (edit: NDX apparently just took out 9-4's cycle high, but should soon enter Wave C). Today could be a big sucker's rally. Even if it lasts another day or two it's probably still a sucker's rally. This rally is probably basically a blip.
The 0.50% Fed Funds rate cut sparked a massive short covering rally today, that was on top of the program trading rally today that was underway due to massive Fed credit the past week, see http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE.
I believe that the July cycle highs for both SPX (S & P 500) and NDX (NASDAQ 100) will hold, and, will turn out to be Cyclical Bull Market cycle highs as expected, see chart 2 at http://www.joefrocks.com/GoldStockCharts.html.
I feel that there's a definite possibility that both SPX's (S & P 500) and NDX's (NASDAQ 100) post rate cut rally may have already peaked, see http://finance.yahoo.com/q/ta?s=%5Endx&t=5d&l=off&z=l&q=c&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c, or, if not, will probably peak tomorrow.
The post rate cut huge spike/rally is probably a sucker's rally, and, both SPX (S & P 500) and NDX (NASDAQ 100) will probably enter Wave C of their major downcycle since the July cycle highs either late today or tomorrow, see http://stockcharts.com/charts/gallery.html?%24ndx.
There's a good chance that all this rally was/is was a very brief spike and then it's probably back to the Wave C that was probably in effect before the rate cut. Let's see how the next day or two play out.
I'm happy, the half point rate cut has probably created an even better shorting opportunity. There should be very good/even better (than before) trading opportunities for QID (UltraShort QQQ ProShares, http://stockcharts.com/h-sc/ui?s=qid).
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
....... http://www.JoeFRocks.com/ .
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
11:56 AM
