Look at one of the junk bond indices:
It is forming some kind of triangle with a decision point set to tomorrow. Sometimes I wonder how beautiful the chart dances are. The chart is just pointing into Fed decision day and then we’ll see a breakout either up or down and this move will be significant. I recommend watching junk bonds tomorrow – HYG, AFBIX, SHIAX. Whatever they do stocks will follow later.
It is pretty much given that Feds will cut 25bp tomorrow. The action in oil was orchestrated to give Feds the excuse to cut without being accused to disregard the high earl prices. But even as we know what will happen it is absolutely impossible to predict what the market will do. The only thing I know is that tomorrow the smart money team will make a good damage to stupid money.
As I think the smart money are very well aware of what is happening with various SIVs in the lite of recent action in ABX and asset-based commercial papers they will probably play bear. If not then I’m likely to lose some money as I’m a bear