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Market Updates

Fed Cuts Rates

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The Federal Reserve cut interest rates by 50 basis points to 3 percent this morning. The Fed cited weak employment and business spending as some of its reasons, and may also cut rates at its October 2nd meeting in order to do what is necessary to ensure liquidity.

Longer-term treasuries like the 30-year and 10-year have sold off on the news, pushing yields higher.

European markets have responded well, and indices in London, Frankfurt, and Paris are all now in positive territory.

FTSE-100 +0.80%
DAX +1.31%
CAC-40 +0.83%

Pre-Market Trading

Below is how some stocks are currently trading in pre-market activity.

Northwest Airlines -$7.32
Frontier Airlines -$2.65
Microsoft -$3.40
Intel -$1.72
Cisco -$0.92
Oracle -0.71
Qualcomm -$2.54
Dell -$0.97
Amgen -$1.83
eBay -$2.62

Jeffrey Canavan

In a final note:

In recent past, we've written some articles in our market updates on the Premier Investor Network related to certain stocks that were looking bullish BEFORE recent events. I have no problem mentioning them again here as potential buying opportunities.

Campbell Soup (NYSE:CPB): We first started writing about CPB in early September as a stock that seemed to perform well due to seasonality effects from September to November. By my calendar, it is still September. Do people quit eating soup in times of uncertainty? Do fall temperatures increase instead of decline during times of uncertainty? I don't think so.

Office Depot (NYSE:ODP): ODP was a stock I began mentioning back on July 20th when the stock gapped higher on BIG volume to the $12-$13 range. In one of my latest updates on the stock, I wrote something to the effect that some traders may have been "hoping" for a pullback to the $11-$12 level to get involved. Last trade on ODP was $13.40. Have recent events made office products obsolete? One could argue that the economy slowing would be bad for the stock. If that's the case, then why has this stock doubled in the past nine months? Not long after we mentioned this stock in our regular market commentary, it was disclosed that Warren Buffett was accumulating shares. What will Mr. Buffett be doing on Monday should shares of ODP find weakness?

These are just two stocks that have come to the front of my mind that traders/investors may want to note. They were stocks that have been showing strength and sponsorship relative to the markets before Tuesday's events. I've always felt it best to trade bullish in stocks that were acting strong as it is a sign of sponsorship.

Any uncertainty found in the coming sessions will most likely hit those stocks that were already showing some signs of weakness. The stocks a bullish trader should be looking to buy are those stocks that were in upward trends where sponsorship was found prior to recent event.

Jeff Bailey
Senior Market Technician

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