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Tuesday, October 28, 2008

High Expectations Tuesday

The stock market is about the same level as the end level for October 10th. This level has been a resistance level for 5 days in the last two weeks. Tuesday the FOMC begins with rate announcement Wednesday. At this point rate cuts have become, expected and the last couple had minimal impact. Expected rate cut is about 0.5, but I wouldn't be surprised if it was significantly more, bringing interest rate to near zero.

Unfortunately, if the FOMC brings the interest rate to near zero, this will have exhausted this mechanism, leaving one less action that the government can do to attempt to stimulate lending.

The issue is, between now and Wednesday the world will hold its breath, to see if any surprise announcement comes from the government in Tuesday or Wednesday, along with the rate cut.

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