Hey Folk
Here we go, the FED finally rise interest rate after so long. It raise
to 0.25-0.5%.They project to raise gradually to 1.375% by end of 2016. Historically
when the FED hike rate it is good for the stock market. However, in theory
(textbook) it should not be. Which is true to a certain extend.
School do not teach human behavior, that why a lot of us will missed many
important point. Usually when the first rate hike after a prolonged low
interest environment will encourage people to borrow more as they are afraid
that the next rate hike will come and increase borrowing cost. The borrowed
money are circulated in the economy thus making the stock market alive.
I think the market will start to be very shaky on the third rate hike.
So far there is no sign that the market is going to crash. The bonds
relationship are good, the yield curve relationship are good. There are
significant buying from the big boys. Rally is in till year end and also start
of next year.
Bingo on the market rally on the FED hike day.
I had long entered on Monday on the S&P, exited majority on Thursday
and reenter long on Friday.
Sorry for the late post. This part just added. We are still in a uptrend. The drop on last thur and fri maybe due to most contract expiry altogether as is the last trading Friday of the year. FYI option expiry on every third fri of each month. At the same time there are many futures contract also expiry concurrently on the same day last week.
No more post till start of the year.
Cheer
