All eye are on FED

Ok, tomorrow is the day. Even though there were more actions today than expected.

The market is known to be vulnerable to the rumors, speculations lately. and today, the WSJ speculate that the rate cut by FED was not a sure thing, and market reacted disappointedly.

It begs the question then what could happen if that speculation is really true. Based on today\'s reaction, it is not difficult to imagine that the market is going to sell off.

The conventional wisdom is that 25 bsp cut is a sure thing, the future market has priced in 90% chance that will be the case. But if we do get a rate cut of 25 bsp, it is hardly a sure thing that the market will zoom up. It all depends on the statement afterwards. If the statement shows the willingness for more cut and discount the factors for inflation, then, the market will be happy and the uptrend can be continued.

What if we get a surprise 50 bsp cut, then, just like last cut, it could spur another mini-rally.

So, here are the cases, we need be parpared and act according