MyHappyTrading.com's  Instablog

This morning, in our Trading Room, a member asked about what to expect immediately after the Fed's rate decision annoucement:

angar November 4, 2009 6:58 AM
Good morning happy. are you expecting rally after Fed meeting today?

I replied:
November 4, 2009 7:18 AM
Fed
don't have big expectations, besides volatility, but, if SPX can close around 1060, it'll be encouraging...

market
I think it'll still take a few more days to sort things out, unless what the Fed says and jobs data on Friday is exceptionally good. we'll need to see SPX above 1070 to really rally.

As expected, the Fed left interest rates unchanged, at historical lows.  Also as expected, the market went through quick volatile swings in the afternoon.  Right after the announcement, the market first went lower, then, higher, and then, lower again!  Nevertheless, we took advantage of the rising gold and continued to lock in gains on GLD, in addition to a quick trade on GOOG:

November 04, 2009
12:58 | HappyTrading GLD ($107.10) Sold to Close GCZKZ Nov 104 calls, at $3.90 +95%
12:12 | HappyTrading GLD ($107.52) Sold to Close GCZKZ Nov 104 calls, at $4.25 +113%
08:06 | HappyTrading GLD ($107.20) Sold to Close GCZKZ Nov 104 calls, at $4.10 +105%
08:04 | HappyTrading GOOG ($544.50) Sold to Close GOPKY Nov 550 calls, at $8.20 +30%
08:03 | HappyTrading GLD ($107.10) Sold to Close GCZLA Dec 105 calls, at $4.50 +64%

We are now completely out of the GLD November 104 calls.  These options traded as high as $4.3 and closed at $3.85.  I think gold may need to trade sideways a bit before going higher, although it may test $1100 this week.  It got to above $1095 intraday today.  With the Fed keeping interest rates at nearly zero, more investors will be looking to move money into gold.  The dollar fell after Fed's announcement today.

After the market, CSCO easily beat the estimates with its earnings report and gave encourage assessments on the economic recovery.  CSCO shares went up +2.83% in after-hours trading.  QCOM reported earnings below the estimates.  However, its shares went about +1% higher.  NWSA delivered positive earnings and traded higher by +3.37% after the news.  PRU reported a 3Q profit that was above expectations, although its shares did not move much this evening, +0.41%.

The Dow was up +30.23 points; SPX added +1.09 points; Nasdaq slid 1.8 points.  Most sectors hovered around the flatline as the broader market.  One thing to note is that FXI (Chinese ADRs) gained +1.5%.  The Chinese stock market has regained its footing and could be ready to test the high set back in August this year.  SOXX (semiconductors) bounced up to test 300 today, but, was not able to close above (discussed this weekend in Sector Watch).  We'll need to see if the semiconductors can respond positive to CSCO's earnings.

Both SPX and Nasdaq charts show little new information tonight, so, we'll look at them another day.

After 2 weeks of selling, the market needs to work off the downward momentum in order to go higher.  This at least partially contributes to the sideways trading in the past few days.  We still have jobless claims (tomorrow) and unemployment rate (Friday) data later this week.  So, the market still appeared to be undecided today.  VIX did come down to close below 28, but, will need to go below 25 to draw more buyers in.  In the mean time, we'll hold a healthy cash position and see how the techs respond to CSCO's earnings tomorrow.

Good night and HappyTrading! ™