Fed
5 min Emini Nasdaq 100
Hi,
Market gapped up by almost 30 points today... and guess what? it started to close the gap.. Price made a desperate attempt to go higher.. but tumbled.. I shorted 1 contract at 1887 when price broke below the opening price.. and another 2 more contracts at 1882
Stochastics also turned down from overbought region.. and this gave enough signal for me to short the market...
When to get out?
price never really closed the gap.. but it met strong support at the moving averages.. and stochastics also appeared to be turning up.. This is a danger sign... I exited at 1865 with $1120 profits..
Fundamentals:
The Fed -- which had resisted lowering rates despite weeks of market volatility, and instead added nearly $120 billion in liquidity into the banking system -- cut its discount rate to 5.75 percent from 6.25 percent. The central bank acknowledged that the stock market turbulence that has pulled the Dow down by hundreds of points a day was posing a risk to economic growth.
"People were kind of baiting the Fed into doing something, and finally they did," said Philip Dow, managing director of equity trading at RBC Dain Rauscher. "The playground monitor finally showed up, and it showed someone cares and someone is bringing rationality into the market."
But the central bank made no mention of lowering its target for the federal funds rate, which has stood at 5.25 percent for more than a year. The fed funds rate determines the rates that banks charge each other, while the discount rate only covers loans the Fed makes to banks. Many strategists believe the market won't settle down until the Fed lowers the fed funds rate target, considered a more significant benchmark.