9:30am
The Fed made a surprising move yesterday by increasing the discount rate. The Fed funds rate is a more important rate though and that has not changed. The discount rate is the rate charged on loans that the Federal Reserve makes to commercial banks. The Fed funds rate is the rate which banks lend to one another.
Most of you have probably noticed that this is the first interest rate hike of any kind since the recession/depression started. I’m considering this rate hike a way to get the bears back in the battle. If you’ve been watching the action this morning, the bears haven’t done much as the rate hike has been interpreted as irrelevant for now.
The dollar is strong again, partially due to the rate hike, so gold and oil are being pressured today. That is the trend we’ve seen so often where the bears finally take charge and lead the market down. Without some added leadership out there, I think the bears could do that once again.
I’m adding to GoIP Global (GOIG) this morning as the story remains intact but the shorts have taken hold of this stock and beaten it down to favorable prices. As I’ve told my readers numerous times, take shares off the table when it makes a significant move upward (not all of your shares just in case it continues to rise) and look to buy back when it takes a breather. GOIG did just that so I hope you are excited at the prices rather than in a panic or frustrated you didn’t listen. With the shorts leading the way, I expect prices could dip even lower. I’m looking at this as I would a rubber band. If you have a good rubber band, you can stretch it significantly without it breaking. Upon releasing a stretched rubber band, it should launch a greater distance per how much you stretched it. When the shorts take a hold of a stock, they are stretching that rubber band. If nothing positive comes out, that rubber band will break however if some real positive news comes out (launch of the service, high demand on the website, etc…), we could see that rubber band fly much farther than originally anticipated if they had not pressured the PPS. I will be adding at these levels and adding even more if it drops lower, which I expect to see today if we don’t receive any news. I’m still expecting next week to have the Verizon (VZ) news and possible service launch date announced. We could also receive news on how much demand the website has seen so far. All could be very positive catalysts to catapult this stock in the short term.
In another holding of mine, Sirius XM (SIRI) is still over $1 and starting to show a slowdown in momentum. I took some off the table recently and will probably let the rest ride into earnings. Look for my earnings preview article tonight or tomorrow. Now onto the most important news of the day that could really change this market like we’ve never seen before.
Tiger Woods! Seeing as CNBC has a countdown to Tiger Woods speech, I’m concerned whether we should expect the market to rally or tank on his comments? Should an apology send the market rallying or tanking? If he chooses further rehab, how will the hedge funds react? What implications could his return (or retirement) from golf have on the overall market? Seriously though, can anybody enlighten me as to why we have a Tiger Woods countdown on CNBC at the moment other than to entice more viewers to watch therefore increasing viewer ratings? Enough of my ramblings on that ridiculous topic. Good luck out there.
Mike
At the time of publication, Mike was Long GOIG, VZ, and SIRI but positions can change at any time.
