Master Rider Blog

Dow Again!

August 29th, 2007 NW Teong

Yesterday I mentioned about Dow Jones Industrial Index hitting the roof of its down trend lines. When something hits the roof, naturally, it has to come down for quite a while. I further commended that Dow is unlikely to break up of its downtrend at this moment.

Interestingly, besides worry about the credit squeeze, the index was sent lower due to a release of US Fed’s minute. Investors have to take note of two important dates, one is the FOMC meeting, the other is the date that it releases its minute for the meeting. FYI, the Fed had its last meeting on the 7 Aug and released its minute only yesterday. Apparently investors are not very happy to read that the Fed did not mention anything about interest rates cut in its last meeting.

A quick look at the macro indicators that I monitored, the yields of all US Treasuries were down (10-year yield 4.51 now down 6 basis point with yield of shorter duration notes of 3-6 months down by 28 basis points) , the Yen against US$ has strengthened to 114.16 yesterday. All these coupled with a sell down in stocks telling me that investors once again are doing what I called flight to safety (please refer to my earlier blogs).

The markets are clearly telling the US Fed to cut interest rates sooner rather than later. Once again, do not forget the important date of next FOMC meeting: 18 Sept 2007. Before this happens, Dow could possibly re-test its recent low of 12,845, it may even try to reach the bottom of it’s down trend lines (which is about 12,600 at the moment) in the next 10 trading days. As I said before this quarter is volatile, and in fact is a pretty exciting quarter. Please buckle your seat belt while we go through this roller coastal ride!

Cheers!

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Entry Filed under: Macro