Tuesday, January 29, 2008

Follow-through day or fall-apart day?

Tomorrow's FOMC rate cut decision is paramount to both bulls and bears. As I have mentioned in an earlier post, bulls need a follow-through day to confirm the capitulation bottom of last week, and tomorrow is THE day they could count on Fed's help. On the other hand, if we see a heavy sell-off following the rate decision, the feeble oversold rebound will end and the retest of the bottom becomes inevitable.

I have made two lists, one is for shorting the 50 bp cut driven rally, and the other is for buying the no rate cut induced sell-off. They obviously look absurd as the entry points are very far away from the current levels, so I am not going to waste your breath.

My gut feeling is a 25 bp cut, and that will bring a long and slow waterboarding for both bulls and bears.

Best luck!

18 comments:

Yuriy said...

Can we see the lists?

Anonymous said...

I'm guessing 50 bp, and initial rally (+150 to 200 ), which then reverses in last hour, and we end up flat to down 100, and bull and bear water torture begins Thursday.

fortune8 said...

I don't think we sell off with 50bp cut. Look at the homebuilders and financials. Some of they have doubled in the last few weeks.

flyingwabbit said...

Yuriy:
you want the lists? you cannot handle the lists! :) for example, how about:
** FSLR: L1, 160-166, stop just below 150, IT=180
** S2, 219-225, stop just above 225, IT=201
Pipe dreams, aren't they?

flyingwabbit said...

fortune8
50 bp may not trigger a sell-off right away, but I am not sure about the reasons you gave.
with the GDP number came in lower than expect, now I think the market will go down with anything less than 50 bp cut.

Anonymous said...

I agree with you, Wabbit, a 25bp should be reasonable. BB have given in WS too much. A 50bp is not impossible, but unlikely to me.

Thanks for sharing your thoughts. Your Samuel is here, anytime you like. :)

Leo

fortune8 said...

If you read my blog at all, I have been waiting for rally to sell into. Santa never came, and January was a dud. 50bp will ignite that rally and resistance will be met and we go back down again. Keep an eye on all the overhead resistance. Example: DOW is 12,500/12,750.

You want a list, look at ags and put low ball buy for them. Note I say low ball. If you get lucky, market capitulate, you get the stock and then it runs up.

razor said...

dumped wfr -.6
long etfc 1k@4.3 pm out 4.6
l etfc 500@4.44

drys!

intc spking=market will go green

flyingwabbit said...

thanks leo!

Razor: I am all in cash, don't want to mess with the Fed :) As for Drys, I am waiting for it to get to 70-80 zone before consider shorting it.

razor said...

i have decided to vote for mccain today, his wife is hot...

ruh-roh eslr is sulking on eday will gap at 9 be filled?

wabbit how low do your technicals go for x?

flyingwabbit said...

razor:
regarding X, there is a decent support around 96, but I have following call in case the market goes crazy after the Fed decision:
X: L2, 85-91, stop just below 85, IT=99.
Far-fetched, you bet! As for your mccain vote, boy, r u wearing beer goggles :P

razor said...

Fantastic!
sold etfc4.3@4.74
sold intc9.7@ 20.94
completely out exept 1k etfc2.50
if the market comes back i'll buy a long kicker, maybe goog will pee on itself and create a buying opp, we already know fridays job report is blowaway, happy trading yall!

Anonymous said...

Wabbit, I now owe you two trucks load of beer, LOL.

Seems the whole market is doomed no matter what. Do you have any estimation about how low Dow can go in the future? and for how long?

I feel this "recession" stuff is worse than 2000-2002 since at that time, only big tech bubble, now, bank loss so much and the leverage could cause significant problem but I just don't see how long we will be able to get over the trouble. Any ideas?

Thanks for sharing!


-Leo

Anonymous said...

Is the worst really behind us?

razor said...

perfect close! down 250 from the peak...here's my psychology...the market is happy about the cut, easier borrowing, but they need to take your shares thus the selloff. If tomorrow is down I would buy the dip big knowing the jobs report is good on friday.
I knew we were going up today, at least intc, because yesterday they just idled the stock and kept it down near 20, I checked and sure enough they were loading up on 20 calls, thus my call this morning we were going green today.

Yuriy said...

Hey guys, what do you think about shorting RIMM tomorrw morning ($94.18). Something tells me that it will not be a good day tomorrow

flyingwabbit said...

razor:
some excellent execution earlier, but then calling this a perfect close with the reasoning I cannot quite get it, and the claim that the job report will be good! what is this? is maccain's hot wife screwing up your mind? :)) or just let me have whatever you are smoking :)

razor said...

Well its a perfect close because I'm out of the market. If the market rallied on then I've left money on the table, so to sell into strength and have the market sell off gives me another buying opportunity, didn't miss the spike and didn't get caught holding the bag.
There was a report in the premarket that points to the fact that Fridays job report will be strong, we'll see, so if tomorrow is a nice down day, I can reload and play the rally on Friday if it plays out that way.
There is more clarity now and the funds might pull the market back to get in. Contrary to that, almost every company has lowered guidance so the market might reflect that and go down, if any of the bond insurers goes belly up its turn the lights out martha 11k.