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Strategies & Market Trends : Aardvark Adventures -- Ignore unavailable to you. Want to Upgrade?

To: ~digs who wrote (3294)	8/15/2007 6:00:01 PM
From: Grandk	Read Replies (1) \| Respond to of 7944

I am watching but would like to see more down here. A nice push to around 12600 would probably rid this market of any bullish sentiment and would coincide with a +10% corrective move in the DOW.

To: ~digs who wrote (3294)	8/17/2007 8:55:33 AM
From: stockman_scott	Read Replies (1) \| Respond to of 7944

08:40 Fed Takes Significant Action that Will Help the Market The Fed has cut the discount rate 50 basis points from 6.25% to 5.75%. It also said it stands ready to "act as needed" to help the economy. This could go a long way to restoring confidence in the stock market. Stock futures are understandably sharply higher as a result. The discount rate is the rate at which the Federal Reserve lends reserves to banks. The fed funds rate is the rate at which banks lend reserves to each other. By lowering the discount rate, the Fed is making liquidity widely available to the banking system. This goes well beyond any repo operation. The lowering of the discount rate will not have an impact on other market interest rates that a cut in the fed funds rate target would have. Lowering the fed funds rate target could lead to a reduction in yields on treasury securities across the board. A lower discount rate is more of a banking operation and will have less impact on treasury yields. The Fed comments suggest that a cut in the fed funds rate target is also possible, however. That would certainly qualify as acting to support the economy. This is a smart move on the part of the Fed. The reduction in the discount rate helps ease liquidity problems in the banking system. At the same time, it won't have much impact on market rates or the economy. The Fed is essentially leaving policy unchanged in terms of keeping up the fight against inflation. Yet, if the economy shows signs of a significant impact from the problems on Wall Street, it can now easily lower the fed funds rate target without appearing inconsistent with the recent policy statements. The most important aspect of the action is that the Fed is showing concern about the turmoil in the financial markets and stating that it is ready to help support overall economic growth if necessary. This should help ease the worst fears in the market that the liquidity problems will turn into a full-fledged credit crunch. The reduction in downside risk should provide a sustainable boost to the stock market... Dow futures are now +184, SPX +22.