The market obliged the script we sketched with some strength this morning and then the selling into the afternoon. Now it gets a bit more difficult to sketch as the cross currents tomorrow are likely to be plentiful. There will likely be the positioning in the morning in then a flattening into the report followed by the Texas two step that we have so often talked of. Let us consider what the Fed may say and the likely reaction to it.
It's a foregone conclusion that they will raise rates tomorrow. If they raise by 50 basis points or don't raise at all I think both situations are detrimental to equities short term.
If they leave the statement essentially as is, that's likely to be hurtful to prices as well. The only situation I see that could lead to a lift in prices is if they were to say they are through or something to the effect that they are close to through. I could be fooled but I don't expect the latter as a high probability event.
Today I did a few trades, removed the futures short on the DJIA and added a few individual stock shorts on some strength into resistance. (YELL, WB and adding to AMZN). The one long I added I ended up removing as it didn't take off and I really don't want more long exposure outside of metals. There I did double up on CDE having recently cut back there. I tried to do the same with PAAS and NEM but neither allow me the luxury of a buy and watch it sky move so I didn't chase. The metals could break higher here but there's still a decent chance they back fill further.
All in all, as I said last night, I'm tired of waiting for a better setup. This one has all the markings of a high probability intermediate term trend change and I've positioned that way. Yesterday I positioned short most all day on the strength that showed up. Frankly, I was quite surprised that the DJIA carried as far as it did but it was pretty stretched on those two days of selling. The point is, in the past I would have tried to work the one day wonder trade and then get caught holding the bag. This time I'm focused solely on a move lower and catching the bulk of it. In fact, when I feel the time is right, I intend to press it. Hopefully I'll have the wherewithal to press hard and be right as it's been half a year in the coming and I'm really tired of waiting.
I would like to caution though that in trading what can go wrong sometimes will and with some big news events about to unfold, we cannot be overly anxious nor certain so as to remove all doubt of being wrong. No matter what we think, we have to continue to weigh the action against what we think and see that they jive. If not, we have to modify our thesis/thoughts until further data is revealed.
Have a great night and see you tomorrow as it promises to be an interesting day.
It's a foregone conclusion that they will raise rates tomorrow. If they raise by 50 basis points or don't raise at all I think both situations are detrimental to equities short term.
If they leave the statement essentially as is, that's likely to be hurtful to prices as well. The only situation I see that could lead to a lift in prices is if they were to say they are through or something to the effect that they are close to through. I could be fooled but I don't expect the latter as a high probability event.
Today I did a few trades, removed the futures short on the DJIA and added a few individual stock shorts on some strength into resistance. (YELL, WB and adding to AMZN). The one long I added I ended up removing as it didn't take off and I really don't want more long exposure outside of metals. There I did double up on CDE having recently cut back there. I tried to do the same with PAAS and NEM but neither allow me the luxury of a buy and watch it sky move so I didn't chase. The metals could break higher here but there's still a decent chance they back fill further.
All in all, as I said last night, I'm tired of waiting for a better setup. This one has all the markings of a high probability intermediate term trend change and I've positioned that way. Yesterday I positioned short most all day on the strength that showed up. Frankly, I was quite surprised that the DJIA carried as far as it did but it was pretty stretched on those two days of selling. The point is, in the past I would have tried to work the one day wonder trade and then get caught holding the bag. This time I'm focused solely on a move lower and catching the bulk of it. In fact, when I feel the time is right, I intend to press it. Hopefully I'll have the wherewithal to press hard and be right as it's been half a year in the coming and I'm really tired of waiting.
I would like to caution though that in trading what can go wrong sometimes will and with some big news events about to unfold, we cannot be overly anxious nor certain so as to remove all doubt of being wrong. No matter what we think, we have to continue to weigh the action against what we think and see that they jive. If not, we have to modify our thesis/thoughts until further data is revealed.
Have a great night and see you tomorrow as it promises to be an interesting day.
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