The minute the statement was out from Fedspeaking Mr. Berny... the Dow rallied up 120 points- it read that they stand ready to take substantive additional action -that is more rate cuts- obviously that was what the market was looking for.
Once he started speaking - he made a nice sober longwinded speech about the subprime mess- explained it well for all of us to understand the crisis, the markets gave up all the gains and was down again. Dumb?
All I can say is the fed is ready and if it says `substantive' it means they are going to cut for several meetings if not in between meetings. So tis a positive for the markets. As usual the market takes its time to digest the details. We are holding onto our positions accumulated yesterday in addition to earlier weeks- and we shall await a rally- the market sometimes is toooo tired to keep going down - its called an OVERSOLD condition- and thats when we find the best trades out there.
Soon the bargain hunters will realize that theres more reason to be in the market than out. The stock market is the best alternative if nothing else- right now-! The S&P is at historically low p-e ratio of less than 14.
Other than the Fed speak- there were the bad retail numbers that were lower than the lowered estimates- but most retail stocks are holding up well. A lot of bad news is priced in surprizingly so. KSS was down 10 bucks to 40 ahead of the numbers- now they come out and lower the earnings estimate by 10-12 cents- thats the time to buy. It bottomed at 38 yesterday. TGT seems to have bottomed at 48- its 51 already. Not that the numbers were good.
Once more companies come out with lowered earnings estimates the stocks start bottoming out- as the collapse occurs pretty much before the announcement. Wonder how the market knows but it does.
Last but not the least the Fed does not think we are going into a recession- so thats as far as the R word goes - ! To my mind the fed will not declare it- we are already in a recession- and once its announced we will be on our way to recovery as the stimulus packages start working...
So theres no need to swoon at this point. Lets wait and watch...
Am aiming for some green today and a big rally tomorrow. Hope that sounds good enough for now...
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