{"id":357,"date":"2009-10-26T13:32:42","date_gmt":"2009-10-26T08:02:42","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=357"},"modified":"2009-10-26T13:33:01","modified_gmt":"2009-10-26T08:03:01","slug":"fed-announcement-on-rates","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/fed-announcement-on-rates\/","title":{"rendered":"Fed announcement on rates"},"content":{"rendered":"

The Set-Up Ahead of the Fed Announcement on Rates<\/p>\n

conducting some simple macro analysis of a couple of financial markets, will help you to chart a course after the Fed’s announcement on interest rates this afternoon and will also be helping in defining the action points.<\/p>\n

As we pointed out before that the Dow Jones Industrial Average ($INDU) is going to oscillate around 12,500\u00a0 The market won’t move a whole lot in between now and 2:15 PM EST.<\/p>\n

The Fed
\nThere is a 100 percent chance of a 25 basis point cut. If the Fed cuts by 25 basis points, then the market is likely to pullback on profit taking. As the Dow is up by over 800 points in the last seven trading days.
\nThere’s about a 50 percent chance of a 50 basis point cut. If the Fed cuts by 50 basis points, then the market is likely to continue higher, led by the Dow breaking above 12,500.<\/p>\n

The Banks
\nas defined by the Banks Index ($BKX) the banking sector, , has staged a nice recovery since the Fed staged its emergency rate cut last week. But the BKX is running into descending resistance and previous support, both of which are converging at the level of 90.<\/p>\n

\"banks\"<\/a><\/p>\n

The BKX at 90 is analogous to the Dow at 12,500, where a breakout above short-term resistance should see some follow through in the coming few days. Both the BKX and Dow will need a 50 basis point cut to breakout. Alternatively, a rollover from short-term resistance will most likely to occur if the Fed cuts by 25 basis points.<\/p>\n

The Long-Term Rates
\nWhile the Fed is set to cut short-term interest rates, by either 25 or 50 basis points, it remains to be seen that what impact this will be having on\u00a0 long-term interest rates, as defined by the 10-year Treasury Note Yield ($TNX). The TNX is right back to 3.8 percent, which was previously a big support level. It’s now resistance. A breakout in the TNX would be good for stocks, but a rollover would not.<\/p>\n

\"long<\/a><\/p>\n

The Dollar
\nThe U.S. Dollar Index ($USD) should be a lot lower, but it’s been holding up at relatively higher lows over the last few weeks. The USD broke below 75 in November, but has been holding above that level so far this year, possibly tracing out a 123 bottom.<\/p>\n

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A stronger greenback would put pressure on stocks, so look for a dollar rally following the Fed announcement to possibly cause a rollover in stocks. Alternatively, a breakdown in the USD might help the BKX and Dow, and other stocks, to breakout.<\/p>\n

Summary
\nLook to some of the stocks emerging from bullish continuation or reversal patterns if the market rallies following the Fed’s announcement.<\/p>\n

Some of the bullish stocks that we’ve been highlighting include:<\/p>\n

QLogic (QLGC), Cleveland Cliffs (CLF), Marriott (MAR), the DB Commodities ETF (DBC), and AKSteel Holding (AKS).<\/p>\n

If the Fed delivers a 25 basis point rate cut and the market rolls over, look to some of the bearish continuation patterns that are on the verge of breaking down.<\/p>\n

Some of the bearish stocks that we’ve been following include:<\/p>\n

Intercontinental Exchange (ICE), Goldman Sachs (GS), and KKR Financial (KFN).<\/p>\n","protected":false},"excerpt":{"rendered":"

The Set-Up Ahead of the Fed Announcement on Rates conducting some simple macro analysis of a couple of financial markets, will help you to chart a course after the Fed’s announcement on interest rates this afternoon and will also be helping in defining the action points. As we pointed out before that the Dow Jones […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1,1381],"tags":[1395,1392,1397,1399,1394,1396,1398,1393],"class_list":{"0":"post-357","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-general","7":"category-trading-price-patterns","8":"tag-fed-banks","9":"tag-fed-data","10":"tag-fed-discount","11":"tag-fed-fomc","12":"tag-fed-interest","13":"tag-long-term-interest-rates","14":"tag-market-fed","15":"tag-us-rates","16":"entry","17":"has-post-thumbnail"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=357"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/357\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}