Wang’s Happy Trading

With big news (BSC/JPM and Fed’s discount rate cut) on a Sunday before the options expiration week, the market is bound to be very volatile on Monday. Fed’s immediate discount rate cut is, no doubt, an attempt to buffer the effect of the JPM $2/share bailout of BSC! Nikkei (Japan) is down more than 400 points at the moment and the Dow futures are down nearly 200 points. Gold, on the other hand, shot up to above $1020/ounce!

SPX

On Friday, SPX lost 27.34 points to close at 1288.14. The daily MAs continued to slide and the MACD fell further.

Nasdaq

Nasdaq dropped 51.12 points to close at 2212.49. Although it managed to close above the 2200 level, its MAs don’t look too healthy. Its MACD was flat.

The failure of Bear Stern will be weighing on the market on Monday, and the market is likely to finally get the capitulation. So, for the new week, we’ll have to see how the market handles the capitulation below the January lows. On Tuesday, the Fed will come out with its rate decision. Is it gonna be 0.75, or, a full-point cut? Again, the support levels that we’ll be looking at is SPX 1225-1250 and Nasdaq 2100-2200.

Sector Watch
We’ve been looking strictly at plays on gold, silver, and foreign currencies for the past 2 weekends. With the Fed’s immediate cut on the discount rate and further rate cut imminent on Tuesday, perhaps, we should stick to what’s working.

GLD (gold)

Gold has already jumped above $1025/ounce on Sunday evening. GLD will likely get a breakout move on Monday.

SLV (silver)

Silver just went above $21. So, SLV should jump also.

GDX (gold miners)/XAU (gold/silver index)


GDX and XAU seem to display very similar movements, and, both are showing potential for breakouts also.

FXY/FXE/FXB (Japanese Yen/Euros/British Pound)


FXY (Yen) and FXE (Euro) both made their new all-time highs last week. Could be getting a bit toppy, but, when the momentum gets them going, they might be hard to stop.

FXB (British Pound) has been weaker than the 2 ETFs mentioned above. But, it is perhaps the one with more potential room to move higher. Its all-time high was set in late October last year at above $211.

Good night and HappyTrading! ™