Tuesday, June 27, 2006
The Nerves Are Setting In
France beat Spain 3-1 tonight in a great game of football in the World Cup. The Arsenal Boys were on top form and it was good to see Viera linking up with "Terry Henry" again!!
In the markets today there was pre interest rate panic and all the markets tanked!! Investors appeared to have ongoing worries that the Federal Reserve is about to raise interest rates too high and make a very serious mistake, killing off the economy and earnings.
So far throughout June, many investors have grown convinced that the Fed, under the leadership of Ben Bernanke, is fixated on combating inflation by raising rates and is somewhat indifferent to indications of economic slowing. This has led to real concerns that a 0.5% rise is coming and the markets do not like this!! Whatever happens on Thursday you can be sure it is going to cause some serious volatility.
We need to be aware.......a hurricane is coming and we don't want to be stuck in the middle of it!!
The RUT was down 11.80 today and finishing at 686.94 and this has relieved the pressure on our short 740 Call considerably.
However after today's move I am seriously considering shutting down this position, wait for the hurricane to pass us by, and then replace the trade. We are income traders and our first rule must be and is always capital preservation!!
I put my spread on for $1.70. I would hope that I will be able to get it off for $1.50 or better at some stage before the Fed announcement at 2.15pm EST on Thursday. I will keep this thought in my head, send an email to my subscribers warning them this is what I might do and see what tomorrow brings.
Until next time.
In the markets today there was pre interest rate panic and all the markets tanked!! Investors appeared to have ongoing worries that the Federal Reserve is about to raise interest rates too high and make a very serious mistake, killing off the economy and earnings.
So far throughout June, many investors have grown convinced that the Fed, under the leadership of Ben Bernanke, is fixated on combating inflation by raising rates and is somewhat indifferent to indications of economic slowing. This has led to real concerns that a 0.5% rise is coming and the markets do not like this!! Whatever happens on Thursday you can be sure it is going to cause some serious volatility.
We need to be aware.......a hurricane is coming and we don't want to be stuck in the middle of it!!
The RUT was down 11.80 today and finishing at 686.94 and this has relieved the pressure on our short 740 Call considerably.
However after today's move I am seriously considering shutting down this position, wait for the hurricane to pass us by, and then replace the trade. We are income traders and our first rule must be and is always capital preservation!!
I put my spread on for $1.70. I would hope that I will be able to get it off for $1.50 or better at some stage before the Fed announcement at 2.15pm EST on Thursday. I will keep this thought in my head, send an email to my subscribers warning them this is what I might do and see what tomorrow brings.
Until next time.
# posted by Paul @ 5:42 PM 
