When the trading day ended, I had a usual daily report planned with charts, support level, resistance levels etc. But the Fed decision after hours to increase the discount rates makes any such post an exercise in futility. Add to it the fact that I am not feeling well at all means that this will be a really short post and I do apologize for the same dear readers. I was thinking of not doing a post at all this evening but the fact that the daily reviews have become a daily feature of this blog made me feel that I should just share my thoughts briefly with you regular readers. So, here is what I am thinking right now.....
- The markets are now way overbought here. Now, that doesn't mean we can't go higher but just that the odds were in favor of a pullback anyway even before the Fed decision.
- I kinda like the way the futures are acting. I expected them to have fallen a decent bit more.
- Gold, obviously, shot down after the Fed decision but rebounded off 1100. I am interested in seeing if this 1100 level holds tonight. Both (2) and (3) might change before the market opens tomorrow, so keep an eye on them.
- The next points are my strategy for tomorrow. I expect the markets to overreact in the first few minutes after the open. Keep an eye out on the level from which the first bounce occurs to see if its an important support point.
- I will not trade gold stocks or any other commodity plays tomorrow as I expect them to be too volatile.
- Don't try and be a hero and try calling a bottom every time the market bounces a little.
- The markets are already overbought and now the Fed news. So, ask yourself this - how comfortable would you be heading into the weekend with overnight long positions? A lot of the traders would ask themselves the same question in the last half an hour, so it doesn't hurt to try and think two steps ahead.
- Am going to try and be really patient here and try and avoid any momentum stocks unless they are strictly for a daytrade. I am in around 75% cash heading into tomorrow and in no mood to give back to the markets any of my ~10% profits (YTD ) that the Market Gods have so kindly bestowed upon me.