The Fed heavy handed reaction pretty much confirms that we are in a recession. I think it was the right move, but it won't end the pain. Just make it a little easier for now. Bernanke is a student of the crash of '29 and he will avoid a disaster at all costs. But we should still get a bit more of a correction. That means you need to start looking at consumer staples and maybe health care and get out of riskier stocks. This rally will run its course, then it will be time to sell it. Gold is screaming inflation and that will be a problem soon (it already is with higher oil and food). Where does this rally end? First we need to squeeze out the huge pool of shorts and let option players cover the naked calls they sold. NDX has a gap to close from July at 2053, another 19 points higher from here, although the gap open at 2047 might do the trick. That would put QQQQ around 50.50, not far from 50% projection of the inverted head and shoulder. For the COMP, the gap is 2673.70/2690.58 (chart). A good place to offload any stocks you wish you were out of last month. This is a gift, take it.
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on Tuesday, September 18, 2007 at 9/18/2007 06:46:00 PM.
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