Safe Trading Blog

As mentioned early this morning, odds were in favor of a bounce today. FED action has fueled this bet (*)… It will not change a lot the situation: it is a substancial increase of liquidity. Just for fun, check the ratios like TLT over TIPS to observe the inflation fears…

You’ve got trade ideas in the previous post: take the opportunities where they are, just follow the market…

Another way to fade the rally (today’s action only) is to look for big loosers, like FRE, MBI (for financials), WY (for materials), GOOG (for technology) and make some buys on these guys. Materials is an intersting sector, following my post of this morning, and financials can make a good shot during liquidity injection (monetary increase)!

Note that the SPX is about to open with a large gap up and thus, there is nothing to expect on the upside with the index itself… It is most probable that it will conserve its gain and that’s all… Hence, the reason to find “elastic” choices as indicated above…

(*) To promote liquidity and “foster the functioning of financial markets more generally,” the Federal Reserve said Tuesday it’s expanding its securities lending program. The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program. Securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27. The Federal Open Market Committee has also authorized increases in its temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank.

This entry was posted on Tuesday, March 11th, 2008 at 1:13 pm and is filed under Commodities, Forex, Stock Code Trading, US Markets. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.