Among what I believe are the only two options on the table, there is conflicting information about which direction is best.
The durable goods number was good and indicates that we are not in recession, which would lead the FED to only reduce the rate by .25 basis points. Although the jobs number was worse than expected when released a few weeks back, it is at a historically good level. The job number is very important and any further rising of this number could spell trouble. Jobless claims will be released Friday morning, and a surprise to the upside could give us a follow through day indicating a move from market correction to market rally mode.
We do have an inverted yield curve and this suggests a .50 basis point cut. It would seem the bond traders and most everyone else has factored that in already. Therefore, anything short of that would disappoint the street and that could send the DOW lower. Should the DOW turn lower with authority, we could drop to a level near 11000, where the next major level of resistance is located.
I would have to side on a .50 basis point reduction but I am starting to think the worst is behind us. As soon as a major financial institution can specifically say how much they have lost in this subprime mess, we can forecast the losses and move forward. Pessimism is rampant, and that when I like it.
Relative strength for stocks when the market is in a downtrend is most telling.
NOTE: VIVO CHART AVAILABLE VIA YAHOO.COMOne stock that has caught my eye in this regard is Meridian Bioscience (VIVO:NASDAQ), whose chart is shown above. This is a prior holding of mine and it keeps showing up as I scan the market for potential winners.
Since I do not know what I am having for lunch tomorrow, I may not be able to forecast VIVO will continue to perform well, but so far so good. Once the bell rings, market action could and will dictate investing adjustments.
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