Volatile markets | stockbee

12/13/2007

Volatile markets

  • People were aggressively bearish after Fed cut and as I said that day evening on Member's blog, one should not read too much in to the Fed day action. Market was going up coming in to Fed meeting and so initial sell the reaction was a likely scenario. However the selling was broad based but on individual EP scans there were only 8 stocks with high volume surge.
  • Yesterday morning lot of bearish bets got squeezed hard. There was lot of confusion and name calling. Whatever be the reason, the post Fed announcement period tends to be volatile.
  • The bears were left scrambling by the coordinated intervention move. The morning pop was never going to be sustainable and I used that to lighten up considerably. When you get unexpected bonanza which was not in your plan, it is always good idea to book some profits. The market spent the day giving up that strength and in the process creating lot of uncertainty going forward.
  • The Market Monitor is back in red on 65 days ratio. We are in risky periods for buying breakouts. But seasonal factors might keep the market in a range.2-3 days post Fed announcements generally tend to be volatile. The volatility makes buying breakout difficult task as a position with 10% profit in morning can turn to loss by evening. So light commitments and only selective trading is currently best option. When in doubt stay out. So back to capital protection mode.

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