June 23, 2008
Today’s action was extremely muted as it awaits to see what is in the Fed’s plans for this week. Tomorrow starts the two-day Fed meeting climaxing on Wednesday when the FOMC statement is released. Don’t expect any rate cut out of Benny & Co. In fact, many are beginning to believe that a rate hike is in order at the August meeting, though we believe it is unlikely when considering current economic factors.
But in all honesty, the Fed would probably be better off to skip releasing any statement, since the market is unlikely to respond in a favorable manner to anything that they say. If they believe inflation is the primary concern, the market will likely react negatively, believing oil still has a lot further to climb in price, and if they say economic growth is the main concern, the markets will likely sell-off to that also. They are essentially stuck in between a rock and a hard spot.
The market failed to improve at all today, as the NASDAQ saw more selling than any of the major indices. It will be critical that the NASDAQ holds today’s lows, or the index could be seeing more selling in the days ahead. S&P looks due for a bounce of sorts.
Here’s the NASDAQ and S&P Charts…