Market Soars!
September 19th, 2007 NW Teong
US Fed surprised most economists and investors including myself when it decided to cut its Fed funds rate by 50 basis points yesterday. Investors responded enthusiastically by rushing in to the market to reflect that action of Fed. Clearly, Fed is weighing between the risk of an economy slow down as well as the financial turmoil due to sub-prime loans delinquencies and that of inflation rate. At the end of the way, I think the risk of an economy recession is too much a risk for Fed to take, and hence a heavy dose of 50 basis points is needed.
This higher cut of interest rates, however did not change my quarterly strategy for 4Q07 (refer to yesterday’s blog). While I am positive on equities, I am even more positive for the short term view (next 3 months) now. In fact, the strategy should be great in riding on this wave which might see a short-term bubble being built up in the next few months. Ride on it and take advantage of this!.
Technically, both Dow and Nasdag have clearly broken up its down trend (see charts below). Will they retest the recent peaks registered in mid July remain to be seen.
Courtesy of Yahoo Finance
Cheers!
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