After the fed rate decision today there were no headfakes like last time. Instead there was only a huge drop that carried on strongly into the close. I do not think this is a one day event. Bulls were majorly disappointed by the fed's actions and the glim outlook surrounding financials is once again coloring market participants' outlooks. Think about how the market has bounced recently. All of that was based on Bernake and Kohn's dovish remarks and the fact that we had a fed that was supposedly "watching our backs".
Not any more. As I pointed to in a recent post, the S&P could be looking at a head and shoulders pattern if this market decline sticks. That could mean a huge decline from here. With financials in constant turmoil, a fed that can't appease markets, and a technical pattern that looks increasingly more negative, I think the short side is the best place to be right now.
I don't argue with big red candlesticks and negative action like todays. However, I do think a decline will eventually present an opportunity to get long financials and ride them out from their current distressed states.
Until then, play defense and short opportunistically.
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