Wednesday, November 4, 2009
FOMC, Cisco, Transocean, Oil, $VIX, $USD....& more
Several events today that helped shape the markets. The FOMC meeting that left rates at 0..expected, it was the phrasing that traders were anticipating.
The Federal Reserve pledged Wednesday to keep a key interest rate at a record low for an "extended period," in a sign that the economy is growing but remains deeply dependent on government help. The Fed said economic activity has "continued to pick up" and that the housing market also has grown stronger, a key ingredient to a sustained recovery. But Fed Chairman Ben Bernanke and his colleagues warned that rising joblessness and hard-to-get-credit for many people and companies could restrain the rebound in the months ahead.
"Economic activity is likely to remain weak for a time," they said.
Against that backdrop, the Fed kept the target range for its bank lending rate at zero to 0.25 percent. And it made no major changes to a program to help drive down mortgage rates.
Oil is trading over $80 a barrel, gold continued to rally and the dollar fell, now at 75.75.
Transocean (RIG reported expected lower earnings, the stock actually traded up on the news and gave back less than 2% for the day. The EIA reported Proved Reserves of Crude Oil Fell in 2008 ~read story~
RIG IS A BUY HERE! for those who don't own it on my original suggestion, leg in here $80-$84. For those who read my blog know that oil tracks gold with a '4-month' lag period. I have posted numerous times that oil would break $75 3 to 4 months after gold broke out. Now with gold setting new highs...I see crude trending higher my price objective is $90 sometime late January into February 2010. One way to play that is to own shares of RIG, my PO there is $100.
News after the bell is Cisco Systems, beating both on the top & bottom line, I'm listening to CEO John Chambers now on a conference call...the usual sand bagging has given way to a "GIDDY" outlook. Cisco is up big in AHT and expect Cisco to lead techs and the market higher...matter of fact Chambers stated in the CC..."The bottom is in and the economy is improving".
Another chart that I'm updating is the $VIX...noting the expanding triangle formation, that has found resistance at the 200 ema & sma, expect a rally in the $SPX to 1100 maybe 1150/1200 into year end.