May peace be with you!
"For what we are about to see next, we must enter quietly into the realm of genius."
--Dr. Frederick Frankenstein
The monster that is the FOMC hikes up the hill (25 bips) and keeps the language in tact. This was conventional wisdom and the powers that be can now focus on the existing state of affairs. I will remind ye faithful that we'll get further discourse this evening (state of the union) and over the weekend (G7). Will that matter? It will from an asset class perspective as the dollar will help dictate the next leg of our journey. It's not a predictive panacea, obviously, but the lesson of January is that monolithic movements can be quite powerful.
The initial trade (post-Fed) was to the upside before Boo landed a right hook that staggered Hoofy. It's thin and whippy out there which is a marked departure from the yawnfest this morning. It is interesting to note the intramarket rotation--out of the semis and (select) financials and into retail, drugs, energy and metal equities. That speaks to the fact that opportunities exist if you know where to cast your gaze. I'm tempted to nibble on some metal names (Newmont (NEM) stochastics look snazzy) but haven't pulled the trigger just yet.
My market feeds crashed shortly after the FOMC and I can almost hear the trading Gods giggling from above. While I am flying blind, I will note that the VXO was testing the December (8-year) lows while the market is well off its high. That divergence has gone largely unnoticed in trading circles for the simple fact that vols haven't mattered. Still, in our constant effort to assimilate the inputs and make sense of it all, it's worthy of a mention and the attendant nose scrunch.
I'm gonna go hunting for my tech support--quite literally--so please lemme hop. I'll be back on the Buzz as soon as I'm technically capable and we'll ride the tide out together. Sincere apologies for the poetic timing but it happens and I'm not gonna pull my remaining hair out. If we've learned anything over the years, it's the perspective to know that things could be worse. That may ring hollow for those chewing on losses today but take a deep breath and search for solutions. Steps forward are always in the right direction.
Fare ye well into the bell and have a peaceful night.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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