With only a few hours to go before the FOMC announces their rate cut, I’m wondering which way the Fed will go.
Some think that the Fed might just cut the interest rate by 25 basis points to round out the total cut to 1 percent. This is the total of last weeks emergency cut, plus todays cut if they go .25 of a percent.
There are others who think that because the economy almost stalled in 4th quarter of 2007, that the Fed must cut 50 basis points so that the economy doesn’t lose momentum and stall again or go down in the 1st quarter of 2008.
I think the market is expecting 50 basis points, and if it happens the market will rally from here. At which point I will buy into strength. If the Fed only cuts 25 basis points, the market I think is going to tank….it is going down and possibly test lows. When it almost reaches the lows just set a few weeks back, that is when I might buy into the weakness.
Many of my trading mentors who have over a decade of experience has told me that the above strategies is what they are going to do. If you have a time horizon of more than 6 months then it is wise to buy near here they say.
Of course for those of you reading this, take heed and trade based on your own opinion not mine or my mentors. Read my disclaimer.
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