Well that wasn’t so bad was it?
The Dow held 11,200 pretty well, the S&P never went below 1,270 the Nasdaq is so pathetic nobody cares what it does and the NYSE dropped less than .5% at worst.
There was only a modest rise in the oil and metals area (http://www.nytimes.com/2006/08/05/business/05values.html?ex=1312430400&en=2fd438ef4a678623&ei=5090&partner=rssuserland&emc=rss
I was speaking to Bernanke at lunch today (I was having lunch and speaking, I have no idea where he was) and I told him the best strategy would be to say “While core CPI appears to be contained, we remain concerned about the growing cost of commodities, notably oil and it’s growing affect on the PPI. With underlying strength evident in the Global Economy and a soft landing in the housing market (I know, a lie) the FMOC will raise the discount rate one quarter basis point which we hope will be enough to allow for a pause at the next meeting.”
This would make everyone happy and still give them room to mess with our heads for another month. We’ll see if Ben uses my language exactly tomorrow or if he improvises.
Here’s the deal – if I held all these stocks I wouldn’t be panic selling the day ahead of what most people think is a 70% chance the Fed will pause. The end of rate hikes can mean a 5% jump in the markets within a month or so so I wouldn’t be dumping out of things, even with oil prices choking the life out of the consumer.
So, Fed pause tomorrow and everyone feels justified but we’re already up from 10,700 (4%) from the 17th or perhaps you can say just 1% over the 200 dma on the Dow. If the Fed raises, then you are likely to see a real good old fashioned sell off!
BP did worse than I thought, dropping all the way down to $70.45 and the $70 puts ran up to $1.10 (up 120%) but I dumped at the open at .95 which seemed like a very good idea until the last 90 minutes of trading when it just fell off the table. COP also took a hit today but nothing like BP did (even though both COP and XOM own more of the pipeline than BP does).