We don't often post about our day job-- trading the equity markets. OK, maybe we do a little bit but, come on, Monkeydarts refers to picking stocks like a dart-flingin' monkey, so cut us some slack. (Ed: Who is this "we" you keep writing about?) With the markets closed today for Good Friday it's a fine time to write about this past week's market activity in the briefest possible way. Technically, it was a ding-dong dilly of a doozy. (Ed: What the...?)
Tuesday the FOMC targeted fed fund rates lower by 75 basis points to 2.25%. Many photogenic soothsayers were surprised that this caused the market to rally upwards as they had heard from the New York crowd they lunch with daily (Ed: That's called research and is tax deductible, dummy. Maybe you should try taking us over to Cafe 49 out on the rural route and write that lunch off once in a while.) that the Fed had to go to 2% NOW and must go to 1% SOON. Otherwise, the world will end or something. Really, New Yorkers get very dramatic sometimes. Ron Insana, that means you.
In reality, lots of people who run money and aren't overly worried by the mortgage market of today were heartened by the smaller than anticipated move. Why? First, they like the fact that the Fed is acknowledging the King Hell inflation they're creating down the road. Secondly, two fed governors went on record as favoring an even smaller move. That likely means that the Fed is close to ending the cycle of looser money. So, the market rallied. Good. But volume was so-so. Not as good. But then, looky here, the dollar started to stabilize, oil dropped dramatically, gold and silver plunged. That is a sure sign that others see the climax run in commodities ending because the fed is going to end the current cycle.
So, after the Tuesday rally Wednesday sees a sell-off of about half the gains. But volume doesn't climb so... GOOD! Then Thursday, the last trading day of this week, we got a powerful move up on solid volume. Meaning? Ladies and gentlemen, the correction has changed to a rally and the rally has been confirmed by a follow-through day.
No sustainable rally has ever begun without a follow-through day like Thursday's. But, not every confirmed rally lasts. Caution rules the day, but for the first time since we moved to cash way back on October 24, 2007 we will have a trading market starting Monday.
There now. Wasn't that boring? (Ed: zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz)