FOMC December 11, 2007 Meeting

Calendar December 11, 2007 | Posted by Jorge

The FOMC decided on Tuesday to cut both the Federal Funds Rate and the Discount Rate by a quarter point. The key in the decision was not the rate cuts but the statement still holding inflation as a key element to their decision. As a result, you saw the bottom from the markets come out, especially in the XLF (the Select Financial Sector Fund). Here are a couple of graphs showing you what happened intra-day. Note how the S&P has completely blown through support.

S&P After FOMC 12/11 Meeting

XLF After FOMC 12/11 Meeting

I may pick up on some SPY puts in the near term. I don’t expect the market to recover for at least a couple of days while they digest the FOMC statements. We may be retesting the lows we saw in August and November if the statement isn’t well received. Be careful. We may have a bear market on our hands.

Category Categories: Equities, FOMC, Index and ETFs, Market Pulse | Tag Tags: | Comments Comments

  • So I finally got onto an internet that can read your website - the widgets and stuff makes it very hard sometimes, same reason I haven't updated my blog. Hope all is going well for you.
  • vivek Tomer
    Hey,

    Watch for the 1464 support. No point buying puts before than. If break I think I am going to exit longs and short.

    Anyhow food for thought?

    later
  • Hey there. How's the adventure going? Shoot me an email off my About Us page ;-)
  • Normally I'd agree, but I took a shot before the announcement and bought a couple of SPY puts. It could have gone 50/50 either way to be honest but the FOMC's been so conservative since the initial 50 bp cut. I'd agree though. 1460's the next stop before we continue downward. It wouldn't surprise me to see that later this week if not today. The markets did not like the announcement at all.
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