Weekend Reading Links

Recent Market Analysis

* Dr. Brett Steenbarger from Trader Feed: Credit concerns have not gone away.

The stock market has behaved quite well lately, today's drop notwithstanding. But the credit markets continue to tell a different story, one that could have negative implications for some banks and the economy overall. That's worth keeping an eye on.

* Adam from Daily Options Report: Upon Further Review: Options Acting Even Stronger Than Meets the Eye.

No matter how you slice it, there is real fear out there of another September shoe to drop.

* Corey from Afraid To Trade: Brief Index Overview.

Let it also be stated that all major US indexes are STILL in a confirmed downtrend on the Daily Charts. Traders may be missing this if they’re not careful with their interpretation of trends.
Price has not made a higher high, and until it does, price REMAINS in a confirmed daily downtrend on all indexes. Be careful of this fact. This is not the time to leverage long positions to the hilt.
You can become more comfortable with any long positions when price makes a higher high and later changes into a confirmed uptrend.
Until then, we seem to be having consolidation on the daily charts. This will probably be the dominant technical picture until the Fed changes or leaves unchanged Interest Rates in their September 18th meeting.

* Chad Brand in Seeking Alpha: A Fed Cut Is Priced-In; No Cut Will Trigger A Selloff.

….. it's important to understand what is currently priced into the marketplace. If we don't get a cut later this month, which I think is certainly more probable than the markets currently are telling us, then stocks are going to sell-off. That is what we open ourselves up to when the market prices in something as a certainty even though there is still an undeniable fact that nothing is certain about the September FOMC meeting.

And even if we do get a cut of 25 basis points, we could still see the market not react positively because more than half of people right now expect 50 basis points (who knows what that number will be at meeting time). Just be aware that the risk-reward trade off right now in the short term doesn't appear all that favorable as long as you assume two things. One, the fed fund futures market accurately gauges what the market is currently pricing into prices. And two, the market will be reacting to interest rate speculation and action in coming weeks.

Trading Education / Wisdom

* Trading The Wedge by Toni Hansen

* Great trading quotes, shared by Simply Options Trader.

Enjoy your weekend! :)