Rates Unchanged, Market's Undercurrents are Weak

Tuesday, September 21, 2010

Federal Reserve bankFed does nothing, verdict not in yet on my selling

Well, the jury is out on my selling this morning after the entirely random moves following the Fed's 2:15 release gave no indication of likely future direction. I had been taking small profits along the way but locked up the rest of my profits today, except for Google (GOOG). The daily candlesticks in Apple (AAPL), Amazon (AMZN) and Goldman Sachs (GS) lead me to believe I am right for now. There are other cues that make me think I am right. The 30-year Treasury futures gained 1.2% on the day while gold jumped following the FOMC announcement gaining $9 on the session and hitting new all-time highs. While the action in gold and bonds today may not be inherently bearish, it sure ain't bullish. On top of these cues, copper has stalled. So, all in all, I'm happy to move to the sidelines after catching a great move and I'll be looking to buy weakness in individual companies I like.

Everyone's a critic of the Fed these days

The market jostled back and forth after the Fed announced that it will leave rates unchanged and will not be initiating QE 2.0. Paul Krugman immediately responded: "We’re failing in our mandate to deliver full employment; meanwhile, inflation is below target; therefore, we’ve decided to do nothing." But of course Zero Hedge took its cue from gold: "Sorry, Ben, can't feed Wall Street cake and then dilute it too. Gold's dramatic surge to fresh all time highs, more than makes up for the spike in the S&P...In other words, on a relative basis there was more capital going into precious metals, and more specifically, away from linen and other infinitely dilutable paper, than going into stocks." While I would imagine neither of these two have any respect for the other, the divergence of opinion is stark, not that that is surprising.

Brandon R. Rowley
"Chance favors the prepared mind."

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