Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Investors reacted calmly to the Fed’s decision to hold rates steady. In fact, stocks closed largely bullish as the Star Trading System also followed up with this slight bullishness with slightly more bullish than bearish signals today. Typically, investors need a few days to really decide how to react to a Fed decision… whether to buy or to short. That is why the Star trading system is also cautious this time round by giving us only a few signals.

FUNDAMENTAL ANALYSIS
The Feds held rates steady this time round as most analysts expected. Stocks actually rallied on that news before pulling back slightly to close positive by the end of the day. This intraday rally actually revealed the fact that investors are still negative to a rate hike and the late pull back revealed investors’ uncertainty about tomorrow’s GDP numbers (see economic calendar). What was really interesting was Uncle Ben’s new approach to this situation… LIP SERVICE! Yes! Call it brilliant or call it revolutionary but he is obviously trying it as a new technique to controlling inflation. All he did today was to suggest that inflation and oil is going to come under control, hoping that traders catch on with it and react accordingly. In fact, oil did trade lower on that comment which shows its effectiveness. But will oil rebound tomorrow? Everytime oil trades down like this, it rebounds the very next day. What about the rate hikes? There was nothing in Uncle Ben’s speech to actually suggest that rate hikes are imminent. So, what changed today? Actually, NOTHING! That was why Dennis Gartman said today that “The Fed Meeting Never Happened”.

TECHNICAL ANALYSIS
Again, nothing really changed today. The Dow was totally sideways today as it forms a bearish continuation pattern at the doorstep of the March Low. Even on the technical front, it was as though today’s market never opened. My takes yesterday still stands.

Star Option Trader’s Thought For The Day : “Always Respect The Market”
 

Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Stocks and oil continue to trade in an uncertain manner today as investors await tomorrow’s Fed decision. We do not put on new positions on Fed decision days because the market could behave very differently after the release at 2pm EST. That would make our entry procedure totally useless.

FUNDAMENTAL ANALYSIS
Stocks and oil traded in a volatile, uncertain manner today as investors await the BIG Fed decision tomorrow (see economic calendar). Even though the Fed is widely expected to start hiking rates soon, would they do it this time round? the possible effect of such a rate hike remains highly uncertain. Could the rate hike move the US dollar up enough to bring down the speculative fever in oil? What would a rate hike when the economy is still struggling do to the economy and the market? Yes indeed, the Fed has not raised interest rates during an economic slump for longer than I have been trading and that certainly throws a new screw into the clockwork. Could that be a positive or a negative for the stock market? How would investors construe such an act? What if the Feds decided to keep rates stagnant? These are questions both professional and amateur traders are asking recently as consumer confidence sinks to a 16 years low today. Yes, you don’t even need to know what consumer confidence index is to tell that a 16 year low is not a good thing. The US dollar slump has certainly caused havoc all over the world in terms of food and energy inflation, so, raising rates is certainly the way to go to solving a lot of problems. However, what would that do to an US economy that is right at the doorstep of an economic recovery? It would certainly bring down the strong export numbers we have seen in the GDP numbers so far. So much uncertainty which no econometric models could answer with any certainty.

TECHNICAL ANALYSIS
As a technical trader, I would certainly make my final decision only after receiving the real intent of investors through price charts after the Fed decision. For now, my charts are still telling me the same strong intermediate and short term downtrend, much like the one we saw back in Dec to January. The March low was also broken intraday today but isn’t significant enough to justify and conclude a technical break of the March low, therefore, the March low support level is intact… at least for now. Well, there is a saying on wallstreet that “there is no such thing as a triple bottom”. If the double bottom formation created by the January and March low isn’t enough to rebound the market, a visit back down to these levels is more likely to be very bearish. This time round, it would coincide totally with the Fed decision. So, the chart is telling us that investors and traders are bearish and have been bearish about all that have happened over the past month and going by the principle of technical analysis, they are expected to continue to be bearish until something significant hit the wires.

Star Option Trader’s Thought For The Day : “Always Follow The System.”