50 Points Cut Disappoints!

FUNDAMENTAL ANALYSIS
What did I say yesterday? Here's a Quote:

"So, here's the bottomline for tomorrow ... 25 points, the market down. 50 points, the market still down. 75 points and above, the market up instantly and then down within the next two days."

Well, the Fed totally disappointed the market today with their 50 basis points cut and I really have to wonder why's that. The Fed can NEVER cut 150 basis points in just 2 weeks! In fact, 125 points cut in 2 weeks is already a give away! But, the market being greedy as it is now, wasn't pleased with merely having their demands fulfilled like some spoilt child, bringing the Dow down from its day high to end down 37.47 points. That was the reasoning behind my predicts yesterday. Adding some pessimism in the background is the GDP number disappointing with only 0.6% up. This really feels like what some analysts call a "Gro-cession" where the economy grows at almost zero rate, slightly above recession but feels totally like a recession. So, what's the way ahead? The Job report this Friday of course! (see economic calendar) The Job Report is likely to be optimistic and perhaps even beat estimates due to increased employment due to the rising export sector. In fact, the ADP numbers turned in very healthy today as well. The Job report is a classic, grandfather-of-all, economic indicator which is always positive if it is healthy. So, anymore rate cuts ahead? I seriously don't think so. The inflation indicator that the Feds are watching turned in very worrying today. Core PCE and PCE both shot skyhigh compared with the numbers in December.

TECHNICAL ANALYSIS
The Dow formed a huge shooting star signal today indicating weakness in this short relief rally and possibly the start of another leg down. A shooting star is a candlestick signal which has a small, negative body with a long tail on top. This signal is created due to the bulls being brutally beaten down by the bears throughout the day, dragging the stock down from its intraday high to end negative for the day. If the Dow should turn down from here, we would be paying a lot of attention to a test of the 12000 level. Breaking that level would push the market further into this bear market. However, if the 12000 level holds, it would form a double bottom, which is an even stronger point from which to accumulate a rally.


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