Hi,

Despite the title, today's trade is purely technical and not dependent on any knowledge regarding the FED's action..
I just want to make sure that you know that we are technical traders, we pay attention to news sources but they don't control our trading decisions.

Price gapped down today only to cover it immediately and bounced back down... It hit my moving average resistance line and started to bounce back up.. this was accompanied by the stocahstics turning up and I longed 1 contract at 1813 ..Notice that short-term MACD went on to cut the signal line shortly after..

Price went further up to cut through the all my moving averages and this is where I longed another 2 contracts at 1818. I only exited my trade when stochastics started to behave strangely and cut down the overbought line at 1828 with profits of $700.

Fed raises banks' emergency-loan rate to 0.75 pct; won't directly affect consumer borrowing
The Federal Reserve decided Thursday to boost the rate banks pay for emergency loans. The action is part of a broader move to pull back the extraordinary aid it provided to fight the financial crisis.

The action won't directly affect borrowing costs for millions of Americans. But with the worst of the crisis over, it brings the Fed's main crisis lending program closer to normal.

The Fed chose to bump up the so-called "discount" lending rate by one-quarter point to 0.75 percent. It takes effect Friday.

The central bank said the step should not be seen as a signal that it will soon boost interest rates for consumers and businesses. It repeated its pledge to keep such rates at record-low levels for an "extended period" to foster the economic recovery.

The Fed had signaled for weeks that a higher discount rate was coming, though the timing of Thursday's decision caught some by surprise. It portrayed its action as moving its emergency program for banks closer to normal.

The announcement came after the financial markets had closed. Investors saw it initially as a prelude to higher borrowing costs across the board. In after-hours trading, the dollar strengthened on the expectation of higher rates. Yields on two-year Treasury securities rose, and stock futures dipped.

After the sell-off in stock futures, Pimco Managing Director Bill Gross warned investors not to overreact.

"I'd accept the Fed at its word -- that this isn't a change in monetary policy or in the timing of it," he said. "Calmer heads may prevail tomorrow."

T.J. Marta, a market strategist, said he thinks higher rates for American borrowers are still months away. But "I think one man's normalization is another man's tightening," he said of investors' initial anxiety.

The Fed has kept the target range for its main interest rate -- the federal funds rate -- at between zero and 0.25 percent since December 2008.

After the Fed's action Thursday, economists said they still believe it won't start to boost borrowing costs for Americans until later this year. Some don't think it will happen until next year, given the fragile recovery.

Chairman Ben Bernanke last week signaled the Fed is in no rush to boost rates.

When the time does come, Bernanke said the Fed will likely start to tighten credit by raising the rate it pays banks on money they leave at the central bank. Doing so would raise rates tied to commercial banks' prime rate and affect many consumer loans. That would mark a shift away from the federal funds rate, its main lever since the 1980s.

Steering interest rates through the excess reserves rate, now at 0.25 percent, gives the Fed more control over money floating around the financial system. The Fed sets that rate directly; its funds rate is just a target.

James Paulsen, chief investment strategist at Wells Capital Management, saw the Fed's move Thursday as testament to an improving economy.

"This may be the bell ringing that the crisis is over," Paulsen said.

The big question over the next few days is whether investors will start selling Treasurys with maturities of two years or less, Paulsen said. Doing so would send yields higher. Savers would start seeing higher interest on their money market accounts.

The economy is growing again, and financial conditions have improved. But unemployment is still near double digits. And demand for loans remains weak. Many ordinary Americans and small businesses have found it difficult to borrow.

When credit virtually shut down starting in 2008, banks that wanted to borrow had nowhere to go except the Fed. Banks can now more easily tap private lending sources. As a result, the Fed feels more comfortable about boosting the rate banks pay on emergency loans.

Because conditions have improved, the Fed also said it will shorten the length of loans drawn from its emergency lending program. It will return to the historical norm of overnight loans, effective March 18. During the crisis, the Fed had lengthened the loans to 30 days.

Earlier this month, the Fed shut down a handful of programs to help banks and other companies access credit. Like those shutdowns, the action Thursday is "intended as a further normalization of the Federal Reserve's lending facilities," the Fed said.

"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or monetary policy," the Fed said.

Banks have scaled back their use of the Fed's emergency "discount" loan window as conditions have improved.

At the peak of the crisis in the fall of 2008, daily borrowing from the discount window reached $110 billion. Commercial banks averaged $14.3 billion in daily borrowing for the week that ended Wednesday, the Fed said in a report Thursday. That was down from $14.6 billion for the previous week.

Congress has demanded the Fed identify the banks that draw on the emergency loans. The Fed has resisted. Bernanke and his colleagues have argued that identifying the banks that take out emergency loans could cause a run on the institution.

Created by Congress in 1913 after a series of bank panics, the Fed acts as "lender of last resort" to banks that can't borrow elsewhere. Its actions help stabilize the financial and economic systems. And its decisions on rates affect the ability of companies and individuals to borrow and spend.

The wind-down of Fed programs earlier this month, most of which had fallen out of use, was little noticed. A bigger impact could be felt by the scheduled shut-down of the Fed's program to buy mortgage securities from Fannie Mae and Freddie Mac. That program is slated to end after March.

The purchases of mortgage securities have lowered home-loan rates and bolstered the housing market. The Fed has held the door open to extending the program if the economy weakens. Some analysts fear that once the program ends, mortgage rates could rise, hurting the recovery in housing and the overall economy. Rates on 30-year mortgages averaged 4.93 percent this week, Freddie Mac reported.

Unwinding the Fed's stimulus is the biggest challenge for Bernanke in his second term, which began Feb. 1. Moving too soon could short-circuit the recovery. Waiting too long could unleash inflation and feed a speculative asset bubble.

More insights into the Fed's strategy will likely come when Bernanke testifies on Capitol Hill next week.

David Rosenberg, chief economist at money manager Gluskin Sheff in Toronto, says the Fed's decision to bump up the emergency lending rate for banks is psychological but still packs a punch.

"The Fed is moving toward a new strategy of draining liquidity from the system," he says. "Will the Fed be raising the Fed funds rate soon? No. But what happens when it stops buying mortgages or even starts selling? That could have a material impact on mortgage rates."

Hi,

How is it going lately? Price gapped up today and continued on it's path of upward trending... however, you can see that the real movement is only during the first 2 hours... thereafter price remained jin a narrow range... bounded in narrow bollinger bands... I certainly don't want to be trading in such conditions. There is no tradeable signal from either stochastics or MACD... No trade today..

Jobless claims increased more than expected and the recent debt crisis experienced by Greece are all bad news still hanging in the air..
Finally we are seeing some big movement... Price gapped down and kept on sliding all the way till closing bell.

There was not a signal from either stochastics or short-term MACD that allows me to short with comfort! I missed the shorting trade... But, let me remind you again that trading is a disciplined art, we should stick to our rules in all circumstances..

Hi,

How is it going lately? Price surged during the opening bell.. with moving averages sloping upwards... stochastics was already in the overbought region and short-term MACD cut up the signal line...

Price exhibited strong action, but there was no signal for me to go long... No trade today..

Hi,

Nasdaq is effectively closed today, but we can still see some action in the futures market..
Market gapped up and price went up in a straight line.. But I don't recommend you trading in a light market..

No trade today.

Hi,

How is it going lately? Price is stalling again as it approaches the resistance formed by a previous high 4 days ago... Moving averages only slope up slightly and I would really like it to have a little bit more slope before I even think of going long..

Stochastics and short-term MACD are not very symmetrical reflecting the price action characterised by short-bodied candlesticks..
Short-term MACD stayed closed to the zero line..

This is no condition for going long... No trade today.

Hi,

How is it going lately? Price gapped down today and never covered the gap... Market is having second thoughts about the so called recovery? At least today, we can tell that market is weak.. Moving averages are sloping down and there is no way we should be thinking of going long, I am looking for a chance to short...

My chance came when stochastics started to cut down the signal line. However this was not accompanied by the same price movements... I shorted only when price broke down the support line at 1862.. I exited the trade at 1853 with $180 profits when stochastics started to cut up the oversold region..

Hi,

How is it going lately? Market has been going up and up.. Apparently we are in an optimistic market... However there is a slight correction today and I made use of this to earn some money!

Price began to fall at the opening with stochastics cutting down from the overbought region.. I shorted 1 contrat at 1891 and another 2 contracts at 1885. As moving averages are flat, price cut it with ease... Notice how short-term MACD also cut the signal line down? The same applies to mid-term MACD

I exited at 1879 when stochastics started to cut up the signal line from the oversold regioin.. profits of $480.

Hi,

How is it going lately? Done your christmas shopping? It's a busy end-of-year for me as well.. I have not been updating my blog as much as I would like to..

Today price gapped up by around 8 points.. it proceeded to close the gap almost immediately... after closing the gap, I was not getting a good signal to go long... stochastics was still above the oversold region and short-term MACD did not provide any signal too...

Basically, at hindsight, price went up to break the high established by the opening bell.. but I stand by my decision not to trade as there was no signals.. After breaking the high, candlesticks basically had shortbodies and were zigzagging ... Not an ideal situation to trade...

Hi,

How is it going lately? I have been busy with some family matters and took some time off from the market. However, today there is a huge opportunity as price gapped up by around 20 points... I was waiting for a signal to go short... stochastics cut it's signal line and started to slope downwards... I took the opportunity to go short... I shorted 1 contract at 1811 and when price broke down the opening price, I shorted another 2 contracts at 1801...

I exited when stochastics started to turn up cutting into it's oversold line.. notice price also ehibitied a hammer candlestick characterised by it's long lower whisker... I exited at 1783 with profits of $1280.

Hi,

How is it going lately? Price is in a ranging band again... If you observed, moving averages are almost flat .. This gives rise to alot of fake signals in the stochastics... Notice how it is bouncing up and down... If you were to trade on all of these signals, you would encountered alot of whipsaws...

Look at short-term MACD, it is hovering around zero line... I don't think it is advisable to trade in such conditions.

Hi,

How is it going lately? We are at turning point again... with the market reaching new highs and sentiments are in a dilemma, market players not knowing when this uptrend is going to end...

Well, what I can say is that market gapped down today.. This was followed by ranging price action... look at the short-bodied candlesticks.. they look ugly to me.. stochastics and short-term MACD zig zagging up and down...

Most importantly, price did not close the gap.. This is a bad sign.

Hi,

Market went up again today... and moving averages are slanting upwards... I was waiting for a chance to go long...

When price pulled back to the moving averages and found support at the opening price, this was accompanied by stochastics cutting up the oversold region.... I longed 1 contract at 1780 and exited at 1786 with profits of $120.

Hi,

After rising for the past weeks.. we are again at cross roads.... you can see that price met strong resistance at the hgh formed yesterday... Price moved down... erratically... in zig zag manner ... all the while with support from the moving averages...

It only broke the moving averages at around 14:30... it is not advisable to go short in such situatioins...

No trade today..

Hi,

How is it going today? After surging for the past week, we have reached the resistance zone... Price is near previous highs and obviously momentum is slowing down...

You can see that candlesticks have shorter bodies and that they are enclosed in narrow Bollinger Bands... Short-term MACD and stochastics zig zag up and down.. there are no real signals ... No trade today..