Fed cuts rate by 0.5%! Market rally --> $1780 profits
5 min Nasdaq Emini 100
Hi,
Did you managed to capture the fed rate cut? Today's trade is a special situation trade. Market is quiet before the FOMC annoucement and it's pointless to trade in this kind of markets. Everytime there's a FOMC annoucement I won't trade until 2:15 pm when the rates are finally out.
Price immediately shot up on the announcement was out.. I longed 1 contract at 1997 and was almost not in time to go long on another 2 more contracts, I only managed to get in at 2005... After this, it was all plain sailing... just sit and wait.. upward momentum was too strong to be ignored... This basically gave me the signal that price action overide all other indicators... I only exited towards the end at 2032 when stochastics started to turn down a little.. profits $1780.
Fundamentals:
In a bold strike, the Federal Reserve slashed a key interest rate by a half point on Tuesday -- the first cut in over four years -- and left the door open to further relief to prevent a painful housing slump and jarring credit crunch from driving the country into recession.
In a crucial and anxiously awaited decision, Federal Reserve Chairman Ben Bernanke and his central bank colleagues lowered an important interest rate to 4.75 percent. Economic and political pressure has been building on the Fed to act.
As a result, Wells Fargo, Bank of America and other commercial banks dropped their prime lending rate charged to millions of borrowers by a corresponding amount to 7.75 percent.
Whether Bernanke can handle the crisis successfully is the biggest challenge he has faced in his 19 months at the Fed helm.
"Today's action is intended to help forestall some adverse effects on the economy that might otherwise arise from disruptions in financial markets and to promote moderate growth over time," the Fed said in a statement released after its closed-door meeting.
The Fed's action means borrowers who can obtain credit should see rates drop on a variety of loans. It will become less expensive for people to finance certain credit card debt and for homeowners to take out popular home equity lines of credit, which often are used to pay for education, home improvements or medical bills.
And, it will help some homeowners whose adjustable rate mortgages reset in the fall. Those rates will still go up but not by as much as they otherwise could have, analysts said.The biggest worry is that people and businesses will cut back on their spending and investment, throwing the economy into a tailspin. Tuesday's rate cut is aimed at making sure that doesn't happen.