Fed Cuts Three Quarters (But Fails to Calm Markets)

This Just Adds More Confusion

By Bryan Bottarelli
Tuesday, January 22, 2008 9:04 AM EST
Tue, 22 Jan 2008 14:04:00 GMT

Dear Bottarelli Research Member,

In an act of desperation, the Fed just made a surprise rate cut of three quarters of a percentage point one week ahead of their scheduled meeting. This is the Fed’s first ¾ rate cut since October of 1984, but instead of calming the markets, this move has only sparked more fear. So I must say, if the market situation was concerning 30 minutes ago, this Fed move has only thrown more volatility, nervousness, and confusion into the equation. That’s why I’d like to reiterate my previous position: If any day is appropriate to simply sit back and watch the market movements, today is that day.

As you know, I rarely advise that you sit out a trading day, but today is a unique situation. Unless you’re a true thrill-seeker, go ahead and be an observer today. Like I mentioned before, the smartest thing to do here is let every else sweat out today’s action — and then we can swoop in and take full advantage of the inefficiencies that today’s action has created. That’s truly the best tactical action plan and I can offer you right now, so let’s be smart and safe in this time of fear. Watch the action safely from the sidelines, and we’ll formulate an action plan once the bloodshed has ended. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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