Wednesday, August 12, 2009

Hurry Up And Wait: FOMC Meets Today

The market is nicely higher today, after a 2-day pullback. The consensus was that the pullback would be deeper, but it looks like smart money players bought last night's close and are up nicely this morning.

Of course, the Fed will make its policy announcement later today, and that could change things in a hurry. This is why the market is normally fairly quiet ahead of Fed meetings. No one expects them to change their tune much. Rates will stay in the 0.00% - 0.25% range, and they should put forth the same message about remaining accomodative for an extended period. But if they get into efforts to unwind their balance sheet, or hint at timing with regard to future rate hikes, we could see some volatility in the market.

The bond market is also getting ready for a $23 billion 10-year Note auction this morning, but lately these bond auctions have gone off well, with solid demand. Currently, the 10-year yield is a tad higher at 3.71%.

All 10 major S&P sectors are higher so far, led by financials and tech, while staples and utilities are lagging. The dollar is lower so far, which is helping boost commodities. Oil is trading near $71, while gold is hovering near the $950 level.

Asian markets closed lower overnight, led by Hong Kong with a -3.0% decline and a -4.7% plunge in China as investors worried about a drop in lending.

The NAR released its metropolitan home sales report this morning, and it looks pretty good. Year/year prices were still way down, but for the first quarter in a while, it looks like there was an uptick in prices. I am going to go crunch the numbers, check back in a bit for a roundup--

Trading comment: No big trades for me yet this week. I put out a couple of trading shorts on GEF and CFR, neither of which are doing much so far. If BAC continues to pullback (or GS), I would like to start a position in either of those. Ditto for RIMM. But after such a strong 4-week rally, I don't want to act like my cash balances are burning a hold in my pocket.


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