Fed Cut Rates? Gapped up --> $740 profits
5 min Emini Nasdaq 100
Hi,
The market gapped up by almost 30 points today,, such big gaps are usually based on fundamental news... Yes, rumour has it that FED is going to cut rates again...
If the gap is 30 point, do you expect it to close? More often than not, a gap of such magnitude is a runaway gap... meaning it will not close! The smart thing to do is to trade in the direction of the gap....
I waited till price broke the resistance line formed by the morning prices and I entered 1 contract at 2073... I further entered 2 contracts at 2077... Today's trade is based on price momentum and the strong runaway gap up...
I held my position all the way till 2088 when stochastics and Short-term MACD appeared to be topping out and I exited at 2088 with profits of $740.
Fundamentals:
Wall Street barreled higher Wednesday for the second day in a row, giving the Dow Jones industrial average its biggest two-day point gain in five years after a Federal Reserve official hinted that the central bank may lower interest rates again.
Investors' renewed hopes for a rate cut added to their relief that companies that made losing bets on subprime mortgages, such as Citigroup Inc. and Freddie Mac, are coming up with ways to raise cash. The market was clearly optimistic that at least some of the damage from the months-long credit crisis was finally being mitigated.
However, Wall Street has been fickle in recent months, with the Dow often rising and falling by triple digits, and no one is betting that the mortgage crisis that tripped up the nation's financial industry this year is over or that the market's huge gains so far this week will stick. Despite its spectacular advance, the Dow remains more than 6 percent below its Oct. 9 record close over 14,000, having plunged due to worries that the housing market's slump will lead to further losses for banks, and that the Fed can't keep slashing rates.