Market Rap 23 September 2009

The cash S&P 500 index closed lower by 1% or -10.79 points. The highlighted line in the chart below is the 15 minutes between 2:15 and 2:30 EST; The time of the fed announcement.

S&P Futures - 15 Minute

Initially the market traded higher, but the move was faded by the smart money. By 2:45 EST the market was on it’s way lower and sold off until the final 15 minutes.

Rates were expected to remain on hold at 25 bps and as widely expected the fed did not move the funds rate. There has been talk of the fed starting to reign in some of their easy money stance, and it was confirmed that the spigot will be tightened a bit. MBS purchases by the NY Fed will be smaller and not as frequent.

From what I could tell, the S&P traded lower on strength in the dollar. I continue to think a move higher in the USD will catch the majority off guard. If this happens, I am positioned to benefit.

As the dollar gained strength, and the S&P traded lower and the $VIX strengthened. In credit spreads, high yield and investment grade both closed at their respective wides of the day.

Volatility Index - VIX - 15 Minute

The intensity of the selling picked up today on the NYSE. Down volume was just about 76% of the total up/down volume.

I’ll be back at 9:30 AM EST or 6:30 AM PST.

Wherever I am, I will be there. And the beat will go on.