The Most Dangerous Week....

Yes, you read it right... this is the most dangerous week that we have seen in a long long time. Few times in the history of the Dow has the Fed's decision on Fed Fund Rate ever been so important. Too many eyes and ears are on the FOMC meeting this Tuesday. Investors (such as you and me) are expecting a cut in the Fed Fund Rate this time round, resulting in the Dow rallying 329.14 points in a single week last week! In fact, the pricing in of this possibility has started since the end of August, resulting in a total gain of over 600 points since 17 August.

Now, imagine the disappointment if Uncle Ben decides to hold the Fed Fund Rate steady again.... Imagine what comes with such disappointment and imagine how much of the already priced in gains the Dow is going to give back...

Uncle Ben made no mention nor hint of a rate cut during all of his public speeches since the last meeting. The US economy has not come this close to a recession in about a century (strangely, Uncle Ben doesn't seem to think so)! If the Feds does not help citizens by reducing interest rates and making mortgage installments affordable, not only will many more mortgage lenders go broke, many many more citizens will lose their homes and their spending power, resulting in a contracting economy and the dreaded "R"!

So, how wise is the US leadership now? We will know in 2 days time but I will definitely not stake all my bucks on the optimistic side.

Option Traders should definitely go delta neutral on Monday.