How To Front-Run The Fed
The Federal Reserve released its so-called Beige Book or
regional economic survey this morning and traders sold in anticipation that the anecdotal
report, released mid-session today, could be negative. The report was completed
prior to America’s most devastating terrorist attack ever that occurred one
week ago today.
Traders sold ahead of the first Fed report, which
showed continued economic slowing and anticipation of a further down-tick
in economic activity. Observers calculate that the economy will be
negatively impacted by the attack last week, in part due to the “CNN
effect,” where individuals remained glued to televisions for
details rather than engaging in more consumer-oriented activities, but also
due to financial market and transportation disruptions.
A warning from Dow component Eastman Kodak
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that its earnings will fall more than 30% next quarter is only working to
confirm the bearish view that corporations will further reduce performance
expectations in this period of earnings pre-announcements.
It can pay to regularly check TradingMarkets Futures
Indicators page for possible direction in the stock market. A look at the
Implosion-5 List shows that the
December Nasdaq 100 futures
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S&P 500
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Dow futures
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momentum. Futures markets are kept closely aligned with cash indices through
arbitrage. Just one of these markets registering on the list provides a strong
indication that an index can move lower. When all three index futures are
on the list, that is a tremendously strong signal for potential downside and this
was your early indication to front-run the Fed report by going short.
The Dow is down 238 at 8664, the S&P 500 is down
26.14 at 10026.0, and the Nasdaq Composite is down 63.00 at 1492.08. All are
trading at multi-year lows.
Besides Kodak’s 10% haircut on its earnings warning, Boeing
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adding to the gloom on the Dow by saying it will fire 30,000 employees on
the expectation that demand for airplanes will slow dramatically. The stock
has fallen 10 to as low as 32 since the Trade Center disaster.
It is a market of stocks rather than a stock market.
The following stocks are making new two-month highs, as pointed out on
TradersWire Interactive:
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TXU |
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