All eyes are on the Fed – Will they twist again like last summer?
It would seem as though the world and the markets are waiting to see what the Fed is going to do today at 2:15 PM. They are supposed to make an announcement. This is always the technician’s dilemma… Do I leave my positions intact with stops? Or do I take them off before this major announcement?
Let me share with you a quick story about one of the most successful traders I’ve ever known. Here was a gentleman who traded all the markets, strictly on the charts. He didn’t listen to the news, didn’t care about the news, and certainly didn’t care about what Ben Bernanke was about to say. He simply went with the big trends. Based on that thesis, one should remain short the equity markets and remain long in the gold market with the appropriate money management stops.
As traders, we are bombarded with news. Some of it is useful, but a lot of it is just fluff to fill up airspace time. One piece that caught my eye this morning, which I haven’t seen reported in the main media, concerns the venerable Lloyds of London insurance company. This company was founded in 1688 in a London coffeehouse and has gone through wars, boom and bust cycles, every money mania known to man and has always managed to survive. The article claimed that Lloyds of London is taking their cash out of the European banks this morning:
http://www.businessweek.com/news/2011-09-21/lloyd-s-of-london-pulls-deposits-from-banks-on-debt-crisis.html
Quite frankly this is shocking, but not surprising given Lloyds’ survival instincts. Lloyds of London is one of the most conservative companies, run by some of the smartest people on the planet. Perhaps it’s an early warning sign about what could potentially happen in Europe.
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