April 28, 2008 This was a pretty slow day and investors are going to mark time, absent other market moving news, until the Fed makes its next decision. The volume today was ultra-light. Let’s face it; bulls have seized the tape with “the worst is behind us” line regarding financials and the credit crisis. From the WSJ was this quote attributed to T. Rowe Price portfolio manager Daniel Shackelford, “We established that the Fed was going to backstop the markets, keep things stable and slowly but surely nurse the markets back to health…risk-taking has come back in the market.” So, that’s the bullish spin. And, things do look better, but hold on a second. Below is a chart of the QQQQ ’s during 2000 and you’ll note the sharp initial April drop followed by a strong rebound in August/September. Then bulls tried to bring markets back only to fail when indexes went into a 2 year free-fall. Please keep and remember this chart since in 2000 we had a tradable rally and perhaps this is just a repeat. Someone said to me once that to be short is to cheer bad news. That might be so but then bulls seem to be cheering a lot of bad news lately as well. Each time major firms announce layoffs of thousands of employees [UBS and C for example] bulls cheer and buy those stocks driving prices higher. So I’d say it’s an even proposition. Until the Fed decides what they’re going to do markets will tense until after the decision is made. Clearly, there was a leak indicating perhaps no interest rate cut or a cut and pause. The reaction was a hit to commodity prices and a bump in the dollar. The Fed must have noticed the reaction and would like nothing better than to have that impact. After all interest rates are very low. I may or may not post tomorrow. Have a pleasant evening. Disclaimer: The ETF Digest maintains a position in IYR , XLB , XLE and MOO. This Post has No Rating Yet Leave a Reply Overall Rating No Rating 1 2 3 4 5 6 7 8 9 10 setDifference(0); showImages(1); Name Name Mail (will not be published) Email (kept private) Website Website XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong> --> » Post Purchase: Inline Ad