Another Bullish Interlude
Our lesson for the
day, ladies and gentlemen, is as follows: Don’t let a news event or the rumors surrounding a news event take you out of your trade if the setup is right. In other words, don’t let the fact that the Reverend Greenbubble and his posse meeting tomorrow take you out of your positions if they are the right, low-risk positions.Â
Trust me on this, Tom Costello and friends on CNBC who are telling us that “traders are covering their shorts ahead of the FOMC meeting tomorrow because
no one wants to be caught short if there is a 75 basis point cut” are not telling you this for your own good. There is always an agenda in this business and when billions of dollars are made and lost on rumors and innuendo, you had better believe that the
“weak hands” are going to be scared out of their short positions before the Federal Reserve seemingly saves the
Free World tomorrow afternoon.Â
Regardless of what Rev. Greenbubble says tomorrow and however the market may react initially, the dynamics of this secular bear market will re-assert themselves when all the fast money is made and the weak hands are laid to waste. Count on it.
Let’s examine a few charts of interest:
Looks like
(
MO |
Quote |
Chart |
News |
PowerRating) is heading to 44 before it needs to make a decision about how badly it really does suck.
By the way, did anyone notice my Shaw Group
(
SGR |
Quote |
Chart |
News |
PowerRating) today? I have been bashing it for the past
three weeks in the $52-55 area and it finally broke today, selling off to $40.50. If you were in this trade, you waited a few weeks but you made 25-30%, not bad.
Now for the chart of the index voted “most like to stagnate for the next two
years,” the Nasdaq Composite.
Yes, it bounced. Yes, it can go slightly higher. No, it won’t last.
On this FOMC eve, the Bulls will certainly have visions of sugar plums and 30% Nasdaq rallies dancing in their heads. I’m sure anyone reading this column is far more sophisticated and astute to think the FOMC rate cut decision will really matter this time next week.
In closing, don’t take yourself out of a trade — let the market take you out. If you are short a stock that is displaying topping action and distribution at price high levels, stay in it. If you are in a stock that is bottoming and displaying accumulation, stay in it.
Have a good night.
Goran