* Growing Pessimism: Here's a five-minute chart of the CBOE put/call ratio for Fed day on Tuesday. Note how the ratio expanded going into the announcement, but really took off as the afternoon progressed, reflecting growing bearishness. This was a nice tell for the afternoon price weakness across the stock indexes. Combining the intraday put/call ratio with the TICK provides a helpful view of sentiment shifts.
* Reaction to Fed Decision: Charles Kirk has compiled a variety of views. See also his most recent links post, including Fed perspectives.
* Trading Sentiment: Jeff has some interesting ideas regarding sentiment-based trading.
* Recap: Trader Mike recaps the wild Fed day and finds trendline breaks and violations of moving average lines.
* Tuesday Insights: Abnormal Returns finds worthy posts on sovereign wealth funds, momentum trading strategies, and a longer-term variant of the VIX.
* Gratitude: Nice to see Alvaro's thoughtful post on gratitude and happiness picked up by Huffington.
* Online Filing Systems: Interesting compendium of resources for organizing your files. I use Mozy for backup; love it.
* E*Trade Insight: Todd Chalem offers a unique view of Citadel's rescue of the online broker.
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3 comments:
Looking at your old post, a closing P/C ratio above 1 suggests a bullish bias the next day. I tend to notice a reversal 1-2 days after FOMC day back in the direction of where price was pre-announcement.
I found the selloff in equities an interesting reaction to the Fed rate-cut. I for one tend to think the Fed did the right thing as far as the markets go. I think their predictability is important in helping the market calm down a bit, and work things out.
Isn't this like a psychologist who has a hysterical or bi-polar patient? Correct me if I'm wrong, but I believe in such situations that the psychologist should not be moving erratically all over the place in terms of how he presents himself. I'd love to hear your thoughts on the psychology here...
Perhaps even more interesting to me, is that USD did not significantly sell off. Yes, it did move, but over the past few weeks USD has been quite strong actually, and yesterday wasn't really a fire sale of USD. In the past few years a rate cut would have really hurt the USD. Obviously, we have changed regimes this year.
BW
Hi Brandon,
Excellent observation about changing regimes. And you're right: the skilled psychologist will respond counter to a client's presentation: responding in a calm way to a manic person; responding in an energizing way to a depressed person. Fading extreme emotions is a big part of success in counseling and trading.
Brett
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