Jamie Dlugosch

Present From the Fed

    Tweet This

Free Trading Guides

With stocks rising on hopes of an economic savior in the form of The Federal Reserve, crude oil prices fell. This is particularly troubling in given weakness in the dollar, an inflationary signal, and an eminent cut in production from OPEC. Apparently the market is thirsty for more than the 2 million cut now expected.

If you have been reading my work, I have been saying as much now for a month or more. The market needs a surprise move by OPEC in the neighborhood of 3 million barrels cut to stem the tide. Oil is down to near $43 in early trading today.

World markets had a more skeptical reaction to the Federal Reserve rate cut. Asian stocks were up fractionally with Hong Kong leading the way with a 2.2% gain. Japan was only up a half percent. In Europe stocks opened mostly lower. France is down nearly 1% with BNP Paribas down 16% on poor operating results.

The euphoria in the U.S. is waning. Investors look to send stocks lower today as they lock in profits from yesterdays gain. This would confirm the sideways trade as we slide into the end of the year. Look for trading volumes to slowly decline for the remainder of the week.

The following two weeks will be holiday shortened. I don't expect any earth shattering moves in either direction. That said, I do think one can prepare for what will be a very wild January.

For starters the January effect, the rally in small cap stocks, came a month early. Take a look at the 2002/2003 December/January trade. I expect a very similar trading pattern this year. March is shaping up to be a very pivotal month for the year. It will be interesting to say the least.