The stock market closed modestly lower today in quiet trading at the start of the Fed's two day meeting. Most traders and investors expect another 50 basis point cut in interest rates Tuesday at the end of the meeting, which would bring the Fed Funds rate down to 0.5%. In the present environment, this likely will not have much of an impact.
At this point, the banks are not lending money, as they try to improve their balance sheets. In recent weeks I had noticed a flurry of potential lending activity by smaller banks in our real estate market here in Southcentral PA. This appears to have ceased for the time being.
Overall, I continue to like the chart pattern on the charts of the major indexes. The volatility is falling and the averages appear to be forming a nice base. The fact that the right shoulder in the existing head and shoulders pattern has not been broken to the downside allows me to believe that the general bias of the market will be sideways to up.
For Tuesday, expect a quiet market as traders wait for the Fed decision on interest rates. The cut in rates is already expected, but the Fed statement could move the market.
Treasury futures traded modestly higher today in spite of the weak Dollar. Initially, the dollar weakness helped Crude Oil rally a bit. However, late in the day, the energy markets sold off again and appear ready to test the recent lows again. Silver and Gold rallied a bit today, and Silver appears to be poised for a solid breakout to the upside that projects up to resistance at the 1400 level.
Scott Cole
www.bestdaytradingstocks.com
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