The market continued its 2-week rally today, with financials and oil companies leading the rise. With, most large cap financials are over 25-30% up over the past 15 days - and that signals its time to cool down. All of us know the recession is not in the rear view mirror yet.
The market rally over the past 2 days has been factoring in a 50 bps cut from the Fed tomorrow. It is difficult to imagine the Fed doing another 50 bps cut after it did a 75 bps cut just about 1 week back. Unemployment numbers are not that bad yet, and durable goods numbers threw a positive surprise today. With that, I would bet a 0 bps to 25 bps cut tomorrow, most probably a 25 bps cut. Personally, i believe another 50 bps cut is an overkill and throws the door open for inflation and even potential stagflation! Fed needs to look after the economy first, then the stock market!
So, if you haven't booked your short term gains yet, tomorrow mornign is a good time to do that - Fed is going to make an announcement tomorrow afternoon and it will almost surely be taken negative to neutral for the market.
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