Tuesday, September 18, 2007

Market Recap

"Hell hath no fury like a Bull scorned" - The Capital Game 09/18/2007

All of last week and leading into todays Fed meeting the consensus was that the bulls were treading on shaky ground and a rate cut would lead to a sell off. Time and time again, the strength of the bull was questioned and today the answer was provided in resounding fashion.

Did the Fed really need to drop rates by half a point ? Maybe not. Is a half point cut a sign that the economy is a lot worse than the Fed are letting on ? Probably. Will we have a recession ? Very likely. So why did we rally 336 on the Dow, 43 on the S&P 500 and 70 on the Nasdaq ? Optimism, jubilation over a rate cut,more buyers than sellers and the fact that the stock market operates independently of the underlying economy. Traders see a rate cut as a sign that the economy will improve down the road. I would use todays rally as an opportunity to lighten up on some positions especially the more speculative names.

Today was a ridiculously good day in the portfolio courtesy of some huge gains in GS DFS OXPS BIDU HANS GE LVS AKAM QLD DDM SSO . I expect some continuation of this rally tomorrow though I intend to reduce around 5-10% of my long exposure. September is not a good month historically especially the latter half and sitting on cash will allow me to pick up some bargains when they come.

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