stock market predictions for tomorrow (12/11)

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momopi_IHB

momopi_IHB

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Does everyone think there will be a rate cut tomorrow, and would it result in a market rally or a sell off?

p.s. I unloaded all my stocks today. It's been a good year.
 
What I think should happen - Nothing. Inflation is rampant and only getting worse. Prices are going up on everything, the dollar is the weakest it's been in years and lowering rates helps no one but investors in the stock market.

What I think will happen - The Fed lowers rates by 50 basis points. Big Ben seems to live in fear of the stock market and acts as if he'll do whatever it takes to avoid a large sell off. The market is priced expecting a 50 basis point cut and I think that's what we'll ultimately see.

In the short term we'll see another rally because of this rate cut but after the reality of the economy sets in the market will tread water through January until we see retailer results of the Christmas shopping season and determine if we're in a recession or not.
 
Speaking of retail sales...

Stores face 'ho-hum' shopping season

After a strong kick-off after Thanksgiving, retailers report mixed sales. Aggressive discounts may follow.

NEW YORK (AP) -- With little more than two weeks left until Christmas, retailers who have seen sales drop off since the holiday shopping season's strong start are feeling the pressure of the final stretch.
 
I was at South Coast yesterday and while parking was a usual nightmare, the stores were relatively empty. I remember past years when the lines were long and you couldn't walk without bumping into anyone.

Some stores are holding up better than others though.
 
I've shifted my investments (stock market) into more long term items now. I have at least one cd now at 6% (bought it quite a while back when I could see that the feds might not raise rates....). The others right now are invested in more agri. stuff as well as regular consumables.... Oil ,funny enough, is doing quite well. Just hoping I get a decent return until the end of the year.

-bix
 
I am going to guess for 25 Basis Point reduction. Market gets all happy for a couple days and goes up a bit. But the reality of the mess in the credit markets and the falling dollar will put the brakes on the market for the rest of the year and maybe the first quarter 08. The housing market is just going to really stink up the economy for the next year at least.

You can also expect a couple of the homebuilders to seek Chapter 11 very soon.
 
The Short View: Interest rates

Financial Times:

"For the markets, rate cuts are like a drug. They can inspire euphoria, but can also induce dependency. Markets, like addicts, need bigger and bigger doses to get the same effect.

This has framed the market’s prognosis for the Federal Reserve, which on Tuesday meets to decide on monetary policy. When it cut by 50 basis points in September, it sparked a huge rally. But cutting by only 25bp in October prompted a relapse, as US stocks fell and credit tightened once more.

With Fed governors admitting that the liquidity squeeze had intensified and traders betting on a recession, markets decided that another 50bp cut must be forthcoming. That sparked the latest rally. But that speculation is dimming: futures are pricing a cut of 25bp not 50bp..."
 
wait till the late news on Washington Mutual hits price. Already down to 18.28 in aftermarket.

"Washington Mutual Inc. (WM), the largest U.S. savings and loan, said it plans to slash its dividend by 73%, raise $2.5 billion in fresh capital, and cut more than 3,000 jobs to address "unprecedented challenges in the mortgage and credit markets."

The company, which will exit the subprime mortgage market entirely, also said it expects to record a fourth-quarter loss after writing down $1.6 billion in value at its home-loans business. On average, analysts polled by Thomson Financial had expected earnings of 28 cents a share. WaMu's shares dropped 8% in after-hours trading."
 
I thing nice about being a short-term trader is that I don't care much which way the market moves. I just hope I react appropriately to what I see.

My guess is that the market will continue to rally and retest the double top it put in place over the last 6 months.
 
I'd be interested in seeing how many people on this forum are short-term traders vs buy-and-hold investors. Personally, I believe that there are short-term opportunities for profit out there, but the combination of trading fees and short-term cap gains taxes, on top of not always making the right trading decisions, make it difficult to realize substantially more return than a disciplined long investor. At least that's been my experience.
 
99% long term investor as regards total assets; 5% as regards time spent research and ...

1% short term trading as regards total asset; 95% as regards time spent research and ...
 
I am a short-term trader and as long as I am making a decent return I really don't care paying the short-term gains on my money. Would rather have that happen then watch 15% go away by doing nothing at all.
 
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