Comments on: Bulls in Pain http://www.thestockbandit.net/2007/08/16/bulls-in-pain/ Trading blog with trading insights, discussion on swing trading, day trading, and trading psychology. Fri, 21 Nov 2008 05:18:46 +0000 http://wordpress.org/?v=2.6.3 By: Emad http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22589 Emad Sat, 18 Aug 2007 22:56:00 +0000 http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22589 Thanks again, Jeff. Thanks again, Jeff.

]]> By: TheStockBandit http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22490 TheStockBandit Sat, 18 Aug 2007 02:45:29 +0000 http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22490 Emad, This was not a rate cut. The Fed lowered the discount rate so that banks can borrow money more easily, but this was not a lowering of the Fed Funds rate (not a rate cut). It does keep liquidity in the financial system, which is necessary, but it's a temporary solution. It was viewed very positively, but the bulls are still a very long way from safe and most anyone who bought anything in the past couple of months is in the red. As they move to raise more cash at higher prices, it may slow the momentum considerably, and at that time we'll have a better feel for if this bounce will simply get sold and create a lower high on the daily charts, thus keeping the downtrend intact. A relief bounce was badly needed as I stated in this post ("a bounce will come"), and the sharp nature of it shows it caught many offguard. The intraday action today was far from impressive, as the high was set at the open. And for all the recovery off Thursday's lows, it was *still* a down week for the market. Once we see a pullback then we can better determine if it's being embraced or not. No predictions here - that's not my job as a trader, but regardless of how this bounce plays out it will certainly help to create more tradable charts in the days ahead. Plus I'd rather have a wild market like this than a range-bound one which offers no opportunity. At least this way we get good moves every couple of hours. :-) Enjoy your weekend! Jeff Emad, This was not a rate cut. The Fed lowered the discount rate so that banks can borrow money more easily, but this was not a lowering of the Fed Funds rate (not a rate cut).

It does keep liquidity in the financial system, which is necessary, but it’s a temporary solution. It was viewed very positively, but the bulls are still a very long way from safe and most anyone who bought anything in the past couple of months is in the red. As they move to raise more cash at higher prices, it may slow the momentum considerably, and at that time we’ll have a better feel for if this bounce will simply get sold and create a lower high on the daily charts, thus keeping the downtrend intact.

A relief bounce was badly needed as I stated in this post (”a bounce will come”), and the sharp nature of it shows it caught many offguard. The intraday action today was far from impressive, as the high was set at the open. And for all the recovery off Thursday’s lows, it was *still* a down week for the market.

Once we see a pullback then we can better determine if it’s being embraced or not. No predictions here - that’s not my job as a trader, but regardless of how this bounce plays out it will certainly help to create more tradable charts in the days ahead. Plus I’d rather have a wild market like this than a range-bound one which offers no opportunity. At least this way we get good moves every couple of hours. :-)

Enjoy your weekend!

Jeff

]]> By: Emad http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22470 Emad Fri, 17 Aug 2007 20:11:21 +0000 http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22470 So the rate cut came and as it looks like it wasn't interpreted as a negative signal. Do you think we are going to have another up-tick on Monday too? Thanks. So the rate cut came and as it looks like it wasn’t interpreted as a negative signal. Do you think we are going to have another up-tick on Monday too?

Thanks.

]]> By: TheStockBandit http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22391 TheStockBandit Thu, 16 Aug 2007 23:25:15 +0000 http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22391 Maybe so David, but there is a fairly good-sized camp out there who thinks a rate cut might signal worse things if it comes right out of the blue, which could stimulate more selling if interpreted that way. At any rate, I agree that the financials do need to improve in a big way if they are going to help the S&P in particular. Maybe so David, but there is a fairly good-sized camp out there who thinks a rate cut might signal worse things if it comes right out of the blue, which could stimulate more selling if interpreted that way. At any rate, I agree that the financials do need to improve in a big way if they are going to help the S&P in particular.

]]> By: David http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22389 David Thu, 16 Aug 2007 20:24:12 +0000 http://www.thestockbandit.net/2007/08/16/bulls-in-pain/#comment-22389 Financials have been leading the market down and I don't think we see an up market until there is some recovery in that sector. Perhaps a rate cut would do it. Financials have been leading the market down and I don’t think we see an up market until there is some recovery in that sector. Perhaps a rate cut would do it.

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