The obvious thing to write about now is tonight’s likely ¼ point Fed rate cut. Commentary on this is abundant as well as the likelihood of this being the last cut for quite a while. US GDP figures surprised me today showing anemic growth of 0.6%. I was fairly sure we would see the first official retraction in economic output, signaling a recession. These were admittedly the advance figures, but a 0.61% variance is highly unlikely (though not impossible).
US stocks have rallied, but the FTSE 100 has stayed fairly flat. I am short the FTSE and the Dow, having traded their retraction zones. I only have a very light position on the DJI, as this is more of a tester, keeping my focus on the movement of the ticker.
My plan is to short the index quite heavily tonight, after the decision, or during the day tomorrow.
The payroll numbers are due out on Friday and I am sure we are going to see yet more signs of a weakening labour market. With not much data out next week and May time market weakness in recent years, if the Dow hits 13,000 I think this is a great level to get in.
One thing I did do today, which I should have done a while ago, is look more closely at Sterling. I follow Sterling/Dollar quite closely and this is still at around the 19800 level. However against nearly all other pairing Sterling is down roughly 20%. I am really quite shocked by this, but also disappointed that I have caught this as a trading opportunity.
Sterling weakness is really quite obvious when you think about it and this trend was clearly signaled before it began properly last August. The system doesn’t really cover that many currency pairings and I have been really focused on using that since last summer. This is quite disappointing as Sterling weakness has been something I have been talking about for quite a while. Of course this is totally meaningless if I haven’t profited from it!!!!