Monday, June 23, 2008

Entry for June 24, 2008

I was surprised to see yesterday that the equity indexes dropped significantly. It seems that my call of next support of 1300 - 1315 on June 11 was correct with there being enough momentum to continue a downward trend from back then. However, the bigger question is if I would have been able to have enough discipline (or guts) to hold on to a losing trade for 3 days as the slide unfolded after.


From June 18, if I had bought oil and held I would have probably broke even as prices slide down to 133 and are back now to around 137 a barrel. A lot of bearish sentiment is coming form high oil prices. The perception is that business are cutting production or experiencing slowed growth due to high prices. Despite high oil prices, the ppi seems to indicate that companies are feeling the pressure strongly enough to pas it on to the consumer. Though if oil prices do maintain in 140's range, which is yet to be seen, some bigger adverse affects on equities may be seen. Prices might be passed on to the consumer and one can expect some noise from the Federal Reserve.

Though the Fed is indeed "between a rock and a hard place" as inflationary pressures with bleak prospects for inflationary growth. No increase will be seen in my opinion for the next Fed meeting. Though a series of holds maybe in place. For certain a raising of interest rates in an already tight credit scenario would not help business grow and would only worsen the housing situation. For the 3rd quarter I do not think there will be any interest rate raising, though it maybe more possible towards the end of 2008 as inflationary affects may be more apparent.

If this is this is certainly the case, the pre-emptive upwards move in the dollar will be seen even than current levels, and new levels on the dollar will be establ

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