Thursday, February 18, 2010

50% rise in Interest Rates :-)

Fed raises discount rate to 0.75 percent

"The Fed said the discount rate would be increased to 0.75 percent from 0.50 percent, effective Friday. "Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve's lending facilities," the Fed said in a statement. "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 for monetary policy," it said." ermmmm right!

Posted by techieman @ 10:05 PM (1029 views)
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11 thoughts on “50% rise in Interest Rates :-)

  • Pounds down 200 pips this morning and Euro down 140 against the greenback. Golds off $18 and dow off 100 from last nights close.

    Ftse open in 5 mins – calling it down 30 (when it was up 25 overnight – so a move down of 50 v overnight levels). Interesting end to the week

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  • Very volatile times ahead (IMO) on the markets and exchanges as we run up to the election.

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  • Hi MG – a few weeks ago you tried to put up a chart for me with an Apex of a triangle for the FTSE (the apex of a triangle often but not always co-incides with a turn)…. Well Daneric has been at it again – this time on the S&Ps (only this time though on a 15min chart – which means that this pattern probably isnt as strong)

    http://2.bp.blogspot.com/_TwUS3GyHKsQ/S33T5s0cCzI/AAAAAAAAEA8/Q0m4LRD3uLI/s1600-h/spx5.png

    His comment here on the overnght move and the snap back is interesting too [and a bit fraught! – he sounds a bit caught and short, after being heavily bearish after last nights rate rise and expecting some follow through into Europe this morning. I must admit to getting short some FTSE yesterday and thinking I was a bit of a Jack Horner – esp when we had 5280 this morning, but that is where some support is, which i thought it needed to break and actually still might (i wont be ordering the Bentley just yet though!) ] :

    http://danericselliottwaves.blogspot.com/2010/02/e-minis_19.html

    Another reason – perhaps – why this might be an interesting day! [At least the forex is behaving itself :-# ]

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  • Hi TM – I think times like these are why I don’t have the nerve for the short term stuff. To the bears this is screaming “sell”, like EWI incorrectly said last Friday night, but the market does otherwise, caught and short as you say above.

    January budget problems has the predators salivating over GBP and gilts. Can the stand off last till the elections and while they are more focused on the PIIGS?

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  • Understandable now why the dollar rallied so strongly on the 17th. Rate decision must have been leaked.

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  • I’ve read it MG :

    “But the decline from the rising wedge was so violent and so fast, there simply wasn’t a good, low-risk entry point for a short trade – unless you anticipated the decline and went short ahead of time. Stocks quickly went from overbought to oversold. And anyone shorting into an oversold market runs the risk of getting caught in a violent bounce.”

    This is what i said on Jan 6th

    “…. i am a little worried of missing the move down – i dont think there will be classical reversal indicators, as such i think that the first move down off the top will be difficult to get into (eg a few hundred down before a shallow retrace).” http://www.housepricecrash.co.uk/newsblog/2010/01/blog-big-rally-in-a-bear-market-27164.php – No. 23

    Which is of course why i went short at S&P 1132 and FTSE 5568. Since then i have got out of most of those two positions but have re-shorted both and looking to short some more if we go higher. I will admit to getting back in the S&P a bit early and am nursing some losses on those at the moment.

    The wedge pattern that he refers to, predicts a fall back to the start of the wedge. However where that “start of the wedge” is is open to debate.

    “This is the best spot to put on a short sale I’ve seen in a long time.” – yes he’s probably right…. assuming (and thats a debatable assumption) that it goes down from here!!

    10400 on the Dow was a 62% retracement; on the FTSE we are now up against trendline resistance and around a 50% retracement. If we break 5280, close below it and the Americans dont reverse and surpass 10400 then i would be pretty confident we are in the next leg of the bear… [it will be iii of P3]… so it would definitely be worth getting involved in.

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  • MG @ 6 – yes that was very nasty, for anyone that got squeezed out of their bear positions, or went long because we basically had a big move up to 1.58 on the 16th, closing near the highs then a big move down – as you know on the 17th, and of course “today” we opened down with a large gap.

    If we close around here, the weekly charts will look quite scary! Of course i know you are holding the US assets, which is commendable since certain people (who have gone a bit quiet here were advocating the opposite). Sometimes it pays to ignore the herdsters.

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  • mountain goat says:

    TM – I enjoy doing my own research but having a trading method like EWI has done me good, thanks for the recommendation. There are so many points of view to confuse the many facts and then idiots like Soros who talk their book (saying gold was in a bubble while he was buying like crazy http://ftalphaville.ft.com/blog/2010/02/18/152941/soross-bubble-buy/).

    Apart from EWI advice, I remain confident with my dollar holdings because I work and live in the UK, fully exposed to GBP, so holding dollar is a useful hedge to my other GBP assets. Especially since there are some big GBP storm clouds looming. That video of Martin Wolf I mentioned above is basically saying he expects any UK gov to “respond to events” when it comes to fiscal policy. He then goes on to say that they should stay fiscally loose till there is a currency/gilt crisis forcing them to tighten. Not very confidence inspiring for my GBP savings!

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  • Yes i watched that MG, i think he is right – whether they cut by alot or by not enough is one issue that the markets will worry about, but the main issue is if they can implement without massive resistance. As i said a few days ago it really feels like we are in the eye of the storm…. FTSE and Dow are being a bit naughty! :-).

    Good luck MG.

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