Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Markets Rate Cut Enthusiasm Maybe Short lived

Stock-Markets / Financial Markets Sep 24, 2007 - 03:21 AM GMT

By: Regent_Markets

Stock-Markets Many traders will be breathing a heavy sigh of relief this week as the economic calendar lightens comparatively. The US interest rate decision weighed heavily on trading action last week. The FOMC announcement had top billing and it certainly didn't disappoint. Many analysts were expecting a 25 base point cut, with much speculation on when the next cut would be. The 50 base point cut took many by surprise and the market reacted with typical enthusiasm.

Bernake and Co became the heroes of the hour on Wall Street, with them seemingly averting the credit crunch and saving the day. The Dow Jones rose 2.5% on Tuesday, and the following day, the Nasdaq 100 came within 4 points of its July peak. Crisis, what crisis? In fact some commentators are now labeling the latest concerns a faux credit crunch.

The decision has sparked some strong movement in the currency market with the Dollar falling hard against the Euro. The Euro remained strong across the board with the ECB maintaining their tightening bias. The Loonie, as the US Dollar/ Canadian Dollar exchange rate is called, fell hard due in part to the rise in oil prices. The USD and CAD are now standing at parity (1USD = 1 CAD), the lowest levels for well over 30 years.

Over in the UK, the queues outside Northern rock disappeared as the Government and Bank of England intervened with various measures and reassurances, aimed to calm jittery investors and savers. Next week is a relatively lighter week on the economic news front. Notable announcements are the US existing home sales on Wednesday, and new home sales on Thursday. With the US housing market being at the forefront of the current situation, this data could bring fresh perspective on the intermediate future. Although it is too soon for the recent rate cut to have any impact, Wednesday's core durable goods orders and Friday's PCE price index will give clues as to the implications of the 50 base point cut.

Opinions on the Fed's rate cut have been mixed, with Wall Street enjoying the move and some economists questioning its wisdom. As the impact of the announcement settles down, some are questioning what the Fed knows, that the rest of us don't. What was it that spooked the Fed into a half point cut?

The implications are that the large cut was made because of the state of the economy, particularly the housing market and job growth.

Last Friday saw options expiration day, and according to research from, since 1990, the week following options expiration in September has shown a positive return on the S&P 500 just 2 out of the last 17 times. Taking out the week following 9/11, the average return for the week is -1.3% with the maximum gain being +0.6. One must always take such seasonality studies with a pinch of salt, but coupled with the dramatic rise we saw on one day last week, it could lend credence to the argument that we're short term over bought on the US markets. A no touch trade, 90 points higher on the S&P, returns around 7% over 14 days. This means that as long as the market rallies slowly, stays still, or drops, you win.

You may also wish to have a look at's new Double Contra which pays out if the market never touches the two barriers you set above and below the current price. If it touches just one or neither of these you win. If volatility reduces during the relatively news light week, it could be an interesting play, particularly if you weight it to the downside.


About Regent Markets Group:   Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, and, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world. Tel  (+44) 08000 326 279

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules