Rate Cut Price In Begins...

FUNDAMENTAL ANALYSIS
The DOW gained 180.54 points today in a nice get back rally even though Uncle Ben stubbornly made no reference to a rate cut in his speech in Berlin this morning. Speculative institutional players are beginning to enter the market systematically, thus slowly pricing in the rate cut. Such pricing in ahead of major, high confidence events are very common, usually leading to a weak rally when the event really occurs. The Fed has a very very hard decision to make here... cut rates and sacrifice the dollar, hold rates and sacrifice the market and the economy... both are very bad scenarios. Let's see what these highly paid geniuses can cook up to save the economy this time round. For us traders, new money should really stay on the side.

TECHNICAL ANALYSIS
A very weak rally today as the Dow gained on declining volume ( read about the relationship between volume and price movement in my article here ). Again, such significant gains on weak volume are always the work of institutional players trying to get ahead of the crowd... but will the crowd come? The daily 50MA line has proven to be an extremely tough resistance level lately... how dangerous is that? Beating that line leads to a rally, failing at that line leads to a bear trend... that's how dangerous that is. Right now, with the Dow retreating back down to the short term oversold region, it might muster some strength in an attempt to break the 50MA line. In fact, I see that coming this week... make or break.... this week.


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