The Fed is Meeting This Week

Well I had a rough weekend and was unable to post until late this morning. As I speak CLRK is over $17.00 and SCUR is up nine cents to $6.84 despite a downgrade on Friday.

Well I guess the big thing on the market’s mind this week is the Federal Reserve decision on interest rates. The Fed will make an announcement on interest rates this Wednesday. Most of the beloved analysts and business economists expect the Fed to leave rates alone. What will grab all the headlines is the statement they release on the economy and inflation. If they raise caution that the economy is showing signs of inflation then look to see a major sell off. Similarly, if they say the economy is showing signs of slowing then there may also be a sell off. I think the only way the markets will not be able to find an excuse to sell off is if the Fed says that the economy is growing strong and at a steady pace.

I think that the markets are looking for an excuse to take a breather. I think that the institutional folks want to get the little guys in and hopeful before the pull the rug out. Perhaps they will let the markets rise a little before pulling the plug but I have a feeling that the markets will drop in the next few weeks. The Dow is within 200 points of it’s all time high right now so I think that I will be very cautious over the next three or four weeks. My gut feeling is that the Fed rate announcement is the perfect day to do it. At this point only time will tell. But the main point of this rant is that the institutional folks will pump up the market and sell shares to the little guys at high prices so they can buy back off the little guys at a discount a week or two later. My gut feelings are often only sometimes right, as witnessed last week, but we’ve seen this too many times in the past.

More on this topic down the road.