Fed saves the U. S. stock market day with a surprise emergency rate cut of 3/4 of a point.
The hindsight trade was to buy the open and get out when the Dow got close to break even. I did nothing today. I did not follow the markets that closely. The spreads on options were very wide during the opening 10 minutes. Fast markets are not the place for position traders, looking for low risk entry points.
As for the rate cut, my personal opinion is that the Fed is behind the curve, reacting instead of getting out in front and being proactive. The worrisome thought is that the Fed has used up a lot of ammo and the economy isn't yet in recession. Is it worth the long term consequences, just to avoid one business cycle recession? It seems like Bernanke is acting like he will lose his job if a recession occurs. There are far worse fates for the economy in the long term than a mild recession.
If the Fed is low on ammo and a major external economic shock occurs what then? I am thinking in terms of plausible events such as another 9-11 style terrorist attack, a shooting war between India and Pakistan, China invading Taiwan. Perhaps subprime and the unwinding of subprime is the be all and end all. However, most folks that have been around a decade or more, understand that subprime, while significant, isn't the worst case economic scenario by any means.
Technically, a retest of today's opening lows on the indexes or on individual stocks might be a good place to look to go long.
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