Thursday, September 19, 2013

No Taper

What a surprise with the market coming in with a zero taper announcement. Not much explanation given to the reverse of what had been signaled a sure thing in the past few weeks. Sp500 rallies 20 points to fresh all time highs, and a huge reverse in homebuilders up more than even I had expected up 6.3% and Gold going up 8.7%, US dollar down.
There's not any magic number we're shooting some point possibly later this year - Bernanke
I was lucky that I closed my short positions last week in LULU and short positions in the EURUSD. As we approached the Fed meeting, the price action was one to the upside, and also the signals combined with confusing economic data point did weigh to risks that the Fed will taper on the low end of it's range. A complete non-taper announcement for September caught all traders off guard, and it was prudent to have risk management leading into this market turning event.
For now we can expect equity prices to continue much higher The uptrends will maintain to hold given yesterday's Fed.
On August the 15th I wrote about homebuilders the ones to benefit greatly from an unexpected lower than expected tapering I managed to get an entry in NLY at 11.58 and a 5%+ move post Fed announcement proves that you should be getting set into these positions ahead of expectations, otherwise you miss the returns that allows you to hold onto the positions for longer time.