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Wednesday, September 12, 2007

Watchlist and The Fed

No, I'm not showcasing any of my watchlist here because I see quite a number of overlaps between mine and Trader Jamie, and Option Addict (1) & (2). They have done a great job on creating a comprehensive watchlist and I see no need to duplicate that effort. Go check them out if you want to fish for some leads.

Next, on to The Fed. There are some very good articles on the Fed I've collected at MY DEL.ICIO.US In case you missed it, I want to highlight these 2 very insightful readings:

-Do Investors Really Want The FED To Lower Rates?
Hans Wagner discussed about the theory of interest rate and stock market movement relations, the reality and a chart that looks back since 1990 how the market moves when Fed fund rate changes.

I am very much in agreement with him on this quote:
"Investors need to be careful as they might get what they wish, a lower Fed Funds rate. While many believe it is good for the stock market, it is also a sign that the economy is weaker than expected, possibly indicating a recession is near. As long as the Fed believes the economy is not slowing too much, then I expect the Fed funds rate to remain at 5.25% until there are clear signs that inflation is under control. Beside the market is already factoring in an interest rate cut. If they get one, it is unlikely to move the markets very much, unless the Fed changes its focus. For now investors need to be very careful as there is more down side risk in the market."
-Gold is a Bull Market...Silver should be right behind it.
Ira Epstein discussed two scenarios -(1)Fed cuts the Fed Fund Rate; (2)Fed holds steady and does not cut the Fed Fund Rate - and the impact on Gold/Silver. He also has a very nice chart demonstrating the seasonality of Gold.

Note these two articles were written prior to the release of Jobs Data on 7/9. Regardless of whether you feel the Jobs Data has any impact on Fed's decision, I feel these articles offer educational insight and are worth a read


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