Back to the drawing board

I receive many messages this morning that read, in part, "Praise be the FRB! Today's discount rate cut kick starts the markets' rally..." -- which could not be farther from the truth.

Today's action by the FRB does not, by itself, cause a reversal (up), but does exacerbate the short term up trend that kicked into gear yesterday.

Please recall that traders had their signals, purchased yesterday at varying points based on each trader's objectives, and would likely purchase more shares today based upon tick by tick data. Today's news reverses the previous trend: the sellers suddenly stand aside, as the buyers crush the doors attempting to get into this (new) market trend. Its duration, however, remains to be determined.

So, to reiterate, today's FRB action merely exacerbates what was to occur anyway.
-- David M Gordon / The Deipnosophist