STRETCHING
Markets are set to open lower this morning on the heels of a crushing in China (lower by 10%) and crummy durable goods orders reported at 8:30 this morning.The DJIA Futures are down 82, SPX down 11.5 and NDX down by 26 as I type. So what happened with yesterday's lousy buy signals? Well I am not ready to abandon the ship just yet.
The last time the markets had a severe correction was mid June/ July 2006. The VIX/VXO combo got stretched to about 125% of their respective 10 day SMA's at their worst and I am eagerly watching this morning to see how near we get to those levels. Yesterdays close was stretched by about 110% at its worst and we closed about 106.5% above the 10 day.
On another note, with the crummy durable goods orders and the probablility of a fed rate cut moving to 40% this morning from 20% yesterday, how long before the lower rate probability bring rallying markets?
posted by DAVID at
8:57 AM
3 Comments:
It is interesting about all this talk of lowering interest rates causing the market to rally. Yet from some of the things I've read, people who have crunched the numbers claim that more often than not when the fed starts lowering the markets actually sell off. It makes some sense to me because when the fed starts lowering the market becomes concerned about how much of a slowdown we are going to see and what impact that will have on earnings.
FWIW I pulled my timing trade, leaving me 97% long. I'll take a look at it tonight and see if I put it back on.
Data is the one thing that's most capable of inducing a good long selloff.
FYI I checked and it didn't execute in a timely manner, so I pulled the order. Prepared to sell at the open price but not at the bottom. Still long.
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