Tuesday, June 24, 2008
Tuesday Intraday Psychology
The markets have strengthened today, with financials providing the charge for the S&P. The failure of crude oil to break down continues to be the headline, but we feel it will break. The FOMC has an open net chance to strengthen the greenback and bring down the price of oil tomorrow, and we are feeling more and more confident that will be done, so we don't recommend being short. Whether through very tough rhetoric on fighting inflation or a 25 basis point rate hike, the FOMC will take advantage of this policy meeting in order to stop inflation, the number one problem for future growth. We think the FOMC is bold enough to address inflationary pressures over already stagnant growth. Please recall Chairman Bernanke was criticized for being too slow to act previously; perhaps that'll all change Wednesday at 2:15pm ET. The markets and talking heads seem to be caught in the headlights, and with such price erosion occurring lately in the indexes and such pessimism, POTC sees psychology changing on a dime. A major bear market bounce will come as crude breaks through to the $120s. The FOMC is in a closed door meeting at this moment, and they have the sword to strengthen the greenback and slay the crude oil dragon. Our readers should not force any trades until crude oil breaks down. The unwinding of the oil trade will offer 10% plus upside for most Indexes, so please be patient. Thanks for returning. We trust the Psychology of this patient Call will make you money.
Posted by The Call Team at 2:12 PM