It is official

It is official now that FED will not raise interest rate for 2019. This was announced following the FED meeting today. This may not seem a big surprise by now as FED has been increasingly dovish in the past two months, but I'm not so sure about it back in late Dec. At that time, the market was so nervous about FED's hawkish tone with widely popular expectation that FED would raise at least two times of interest rate! That was the time I made a bold prediction: "But I think the FED may likely yield to the market pressure and may not raise rates at all in 2019." I'm sure not many people would take my word seriously and I even got some immediate feedback from friends that it sounded crazy to expect no rate hike for the year! Here we are now and I'll even go further by predicting that we may see another round of QE in the next 1-2 years. FED is projecting one rake hike next year but I'm not so sure. We'll see how it will turn out to be.


Normally a dovish FED would be music to the market and indeed the initial reaction was quite bullish following the FED announcement. Unfortunately the euphoric mood quickly faded and turned down again by closing. I won't argue that a dovish FED is quite positive for the market in general and that's why this was one of the two reasons why I predicted a 20% upward move in 2019 for stocks. But nothing is moving in a straight line. The market has been basically moving in a straight line up for 11 weeks now and it is becoming increasingly tired. You have heard me "talking down" the market for some time by now and I will continue to sing the same bearish song for the near term. I simply cannot believe the market will just go up from here for new highs without first a sizeable correction. The underlying technical indicators are sending more and more signals for a turn of the tidal wave. The poor price action following extremely bullish news today  is another big warning sign. 


I could be wrong of course but I'm happy to accumulate more cash these days and will be only doing extremely short term swing trading  to bet for the extreme conditions, e.g. shorting FDX and long BA.