My Ben Bernanke Meter

Today I feel will be an extremely important make or break time for the Fed and the market overall. I believe the Fed is caught up in a no-win situation and the numbers that are released today are more psychological in nature than ever before. My personal opinion is that the Fed cuts by 0.25 vice 0.50 the market wants. First, the Fed just cut by 0.75, so a 0.25 cut would be a nice round 1.00 basis cut within the past two weeks. I think the Fed still needs to have somewhat of a "silver bullet" on its hip (some will argue this point) for more drastic moves in the market place and dropping rates just to drop rates lessens the impact overall. My thoughts are that a 0.25 rate cut = big drop for the week; 0.50 rate cut = flat/slightly up market for the week. One question a person could ask themselves: Did the Fed learn anything from the last time the market wanted/expected a 0.50 rate cut and the Fed did not deliver? Thoughts always welcome.

Christmas Sell-Off?

I think the market will be down at the end of this week. The factors that play into my thought process are year end taxable events, market still recovering from only a 0.25 rate cut, and people closing out positions to lock in year-end gains for themselves and/or stakeholders. There are a few sectors, which I think will be weaker in the near future, so I will keep an eye out for some weakness on Diana Shipping (DSX) and Dryships INC (DRYS). I will also look to short or pick up some puts on Transdigm Group (TDG).

Analyst Reversal

Last week it seemed like every analyst on Wall St was leaning towards a .50 basis point rate cut. Today, I am hearing a more relaxed version and the consensus seems to be registering a conservative .25 basis point rate cut. This may end up catching some people off-guard who were making moves specifically on the upcoming Fed decision. Most people will shy away from making any big decisions prior to the Fed announcement, however there could be big rewards for those who are willing to stick their neck out on some investments. I personally will fall somewhere in the middle. I will be tracking many stocks, but will not overextend myself unless something huge falls into my wheelhouse. There are a few general stocks I will be watching both long/short, but will focus quite a bit on some of the wireless/telecom service providers. These are not endorsements to go out and purchase just "showing my hand" a bit. I currently do not have a position in any of the listed stocks.

General

Life Cell Corp (LIFC) - Long

ABB (ABB) - Long

Agrium (AGU) - Long

Sterlite India (SLT) - Long

Johnson & Johnson (JNJ) - Long

Transdigm Group (TDG) - Looking to short/buy puts

Blue Coat System (BCSI) - Looking to short/buy puts

Telecom

Vimpel (VIP) - Watchlist

Mobile Telesys (MBT) - Watchlist

Chinal Mobile (CHL) - Watchlist

Turkcell Iletisim (TKC) - Watchlist

Higher Highs?

Just wanted to get a sense of what others thought about the continuing rise in the market. It seems that one could argue about certain data and how horrible the market should be acting now, however the market remains resilient. The housing market is still in the doldrums, oil remains at high levels and more economic data is projected to come in the near future which should demonstrate a continued slowdown. So my question to all is: Is everyone hanging their hat on a fed rate cut? What is that magic number that people are looking for? Finally, if that magic number is not achieved or a rate cut does not occur have we become our own worst enemy, by expecting too much too soon and not letting the markets run their true course?