I watched the trades for the last hour. It was amazing. There was a little resistance to the price going up but those shares got gobbled up in a nanosecond. There must have been close to a million shares in the last forty five minutes. My perception was that most of the volume was shorts clearing. My take is that based on the broader economic picture many many funds shorted high multiple tech stocks as a hedge to a down market based on the anticipated fed action. When total short interest was posted I think most got worried. In general the shorts were sitting on gains and when the realization set in that most of the bad news concerning the fed was priced in and that the market was not going to tank based on anticipation they started looking for opportunites to take profit. The covering caused a mini rally today. I am not suprised that Garmin was up as much but INTC which was heavily shorted was up over 3%. Not even the Captain could have dreamed that. Everyone expects a violent knee jerk reaction to the feds fund announcement but I think the market will remain relatively flat unless the anouncement is for a half or a pause. I expect volitality on Friday as a lot of funds will be looking to either open or close positions for the quarter. It is most interesting that energy stocks have basically disconnected from front month futures contract and are trading more on announced and anticipated earnings. I expect energy to provide momentum for our summer rally along with short covering. A final thought on Garmin. Over half of their revenue last quarter came from products that had been on the market for less than a year. It looks like the winner in GPS will be the company that keeps fresh products in the market. I know what company I have my money on. Larry
Great post! I agree with your assesssment of the pin action in the last hour today. The shorts were covering. It was awesone!
Oil has traded higher 3 days in a row and $70 oils (or more) is here to stay. I have some money in oil stocks and I think tthat is the safest play for this summer.
The Feds are way behind the curve. They need to lower interest rates and not raise. they have already killed the housing market (their original intent when Greenie started raising) and will not solve the energy problem by raising rates.
Big Bad Ben wants to prove he is a man and he will screw up this economy! He will be lowering rates this time next year.
Completely disagree. The economy continues to get stronger and we've got an unfunded war in Iraq. In 2002 we could afford guns because the butter was melting. But now we've got guns and butter and we can't afford both without either raising taxes or raising interest rates.
I am not saying that we are going to have a recession. On the contrary. By raising interest rates now, the Fed can lower them later on if a recession is on the horizon.
Ironically, raising short term interest rates keeps long term interest rates in check, which prevents the real estate market from imploding.
Gas is going to $5/gallon. So if you're shopping for a new car, think fuel efficient.
The new Honda fit should be a winner. Consumer Reports wrote about it in their August 2006 issue, but everyone should test drive it.
I personally didn't like some things about it, but its cute, affordable, and fuel efficient.