Finally, the last week of June, the week ahead of the Fed’s report has come. Once again I cleared out most of my longs, and avoided shorting stocks that took a hit since May 10. I did, however, managed to make a few swing trades that have their own stories developing. Anyway, as I said before, I think majority of the negativity of a rate hike are already priced in the market. My best argument is the CPI data that occurred two weeks ago. The data basically guaranteed a rate hike, so why should the market still be guessing if we’re going to have a hike? Nevertheless, I still think the news will have an impact on the market, which would explain my seemingly hypocritical move of selling my long positions. The sad truth is that the market is too sensitive. Everyone can know that something is about to happen, but when someone actually says it, then everyone reacts as if they never knew. My guess is that that will happen this week with the Fedspeak.
Still, I’m more bullish on this turn, and adding back to the long position after the Fed’s announcement would be a great move on any signs of market optimism. There’s just too much support on the bull side this time- correction is over and I’m sure Bernanke doesn’t want to start his career in a bear market (ie, he’ll be careful with his choice of words), market indexes are bouncing off moving averages, oversold indicators, shorts are covering their positions instead of adding to it ahead of “the news”, the Dow is approaching my $11,150 sweet spot, and finally, inflation and interest rate news should not have brought the market down this low. Therefore, we should be moving up.
Joined Jul 30, 2008
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