Stock Market Analysis - 06-20-2008

June 20, 2008 · Filed Under Broader Market 

SPY Daily Chart

Even the stock market can’t avoid Newton’s First Law.  The downward momentum continued as credit and oil worries played prominent roles in the news again.  The fed decision is just about upon us and it will be interesting to see when they’ll start raising rates again.  After a fresh wave of poor reports across the financial industries, traders increased the odds from 78% a week ago to 92% today that the Fed will leave the rate at its current 2 percent.  Of course the line on the fed rate slides faster than the line on a college football game, so keep a watchful eye when the news comes out next Wednesday.

Faithful readers know that I normally avoid trading ahead of big news days and this one is no exception.  I’ll probably leave the new system sitting on 100% cash most of next week since it hasn’t been tested on fed meeting days at all yet.  I could probably try to train the model on just fed meeting days, but it doesn’t hurt to skip a day since the trader only sees action half the days it’s running anyway.  Expect next week to foreshadow the direction the market will take over the summer.

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