Reversal (again?) For Ishares Lehman 20yr (NYSE: TLT)? Asks Market Timer Frank Kollar
December 12, 2007 (FinancialWire) (By Frank Kollar)
Shares of the exchange-traded fund Ishares Lehman 20yr (NYSE: TLT) had been headed lower for the past two weeks, or at least until the Federal Reserve Board shook things up on Tuesday, December 11 th.
The Fed’s decision to cut federal funds rates, as well as the discount rate, by ¼% left everyone upset. Stock traders were looking for a ½% cut plus language assuring the markets that more easing would follow. They did not get either.
Typically, the Fed offers direction in the statement accompanying rate changes, and Fed watchers were expecting assurances of more easing ahead. But this time the Fed did not signal that it was open to more rate cuts. Instead, it declined to give any view of the road ahead.
It was not just the stock market that took a beating. The bond market also reacted, but with soaring prices, and so ended the downtrend at least for the short term, that had been pushing shares of TLT lower.
At Fibtimer we do not make decisions based on news events, and even though the Federal Reserve Board is a better bet than most news events, the rule remains. When the trend changes, we change. TLT, on the verge of turning negative, retains its bullish position for now.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in the TLT.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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