Rumor Mill
Talk and rumors dominated the session thus far today, including speculation – and only that – of a Fed rate cut, as well as concern about the health of some Japanese banks.
We saw a nice bounce this morning in the S&Ps, which are currently at 1185, roughly at the mid-point of the session range thus far. The low for the day is 1168 and the high is 1200.
Rumors of imminent rate cuts have helped the upside. But the double-edge to that sword is that the recovery in the market may make that scenario unlikely.
In addition, according to news reports, several Japanese banks have been placed on “rating watch-negative” by one rating agency, which contributed to volatility and uncertainty in early trading.
One thing to keep in mind: as we saw in 1998, “crises” in the financial markets and the steps taken toward recovery often become launching pads for rallies. However, it will take some time for that to materialize.
In the meantime, I’d be careful of the short side today. Good buying was seen in the Pit between 1180 and 1186 this morning.
NASDAQ was trading at 1801, with a low of 1719 and a high of 1832. This market looks better over 1805. But things are still uncertain, particularly given the trading rally occurred in the morning, rather than in the afternoon.