Will the Fed pause on Tuesday?

[BrandNewTrader]

I appreciate the constructive criticism. It has forced me to take a harder look at my analysis and strategy and I'm now more confident than ever before.

I still haven't heard any counter-arguments to the coming '06-'08 US recession and market slump.

 

[riskarb]

Quote from BrandNewTrader:

So far so good. I've made my first entry, plan on adding twice more. Once right before the Fed decision, hopefully they pause, the market ralies and I can make my final and largest entry when all of the puts are cheapest.

Sounds like a rational, well-conceived strategy to buy pure vega at the absolute peak [imminent fed decision]. Don't count on early retirement just yet.

 

[Trader5287]

My call is pause and short fry.

Take it up!

 

[nitro]

Very tough to say. But I can tell you this, it is not 15 or 20% which is what the FFFs are saying. I estimate it at closer to 55%. If QM rallies Monday or Tuesday to high $70, it is easliy 50% ++. But to me it is not the next meeting that counts, but the combination of the rest of the year odds of a raise, which in my estimation is close to 100%.

First time in a long time I am this divergent from FFFs. What I find even funnier is that the market considers it a victory to go higher on a clearly slowing economy. Either way, the short term thinking that dominates todays market even in the face of mounting evidence is going to create a real juicy short when it comes.

My estimation of markets continues to be, kill shorts and then kill longs, in that order - whipsaw. Rinse wash and repeat. When it goes to kill longs then kill shorts, watch out. Friday was kill shorts, kill longs, then kill shorts again. A very rare day.

nitro

 

[taodr]

Check this out from Australia, I still think they keep jacking up rates until gold goes to $350. Might pause a touch but keep going in the long run.

http://www.theaustralian.news.com.au/story/0,20867,20023502-601,00.html

 

[thecalip]

The fed needs to raise more rate to keep inflation low and make housing more affordable. The current high housing price combine with record energy cost, own a house become a distance future for most people. Unless you make 100k after tax, there is no way you can afford to buy a decent place and live comfortably.

 

[QQQShort]

Quote from thecalip:

The fed needs to raise more rate to keep inflation low and make housing more affordable. The current high housing price combine with record energy cost, own a house become a distance future for most people. Unless you make 100k after tax, there is no way you can afford to buy a decent place and live comfortably.

Each 1% rise in mortgage interest rates is equivalent to a 10% rise in housing prices when making monthly payments (30-year loan). If rates rise 2% and house prices drop 20%, the slight decline in monthly mortgages payments probably won't make housing more affordable.

 

[infolode]

No pause. http://www.albinoblacksheep.com/flash/killbill.php

 

[S2007S]

Tuesday afternoon will be extremely volatile. I think a 1/4 raise and no pause.

No pause would probably erase most of gains we have had in the last 2 weeks. 11k easy on the dow again and nasdaq 2050.
No pause and I would be thinking to short the housing sector stocks like KBH, JOE, BZH and TOL or the entire sector in one ETF XHB.

Many are anticipating a pause on tuesday. A possible pause could cause a brief rally and then another selloff when everyone starts to understand that the economy is slowing.

 

[The Kin2]

Bernanke's job will be done when home prices start to depreciate.