Although the Federal Reserve has increased the probability of a 50-point rate cut in the past two days, the objective negative haze has not dissipated. To put it simply, the logic is that the market will choose to cut interest rates when there are problems in the economy. The size of the rate cut represents the size of the economic problem and the size of the market release.
If the economic problem is too big, both traditional and non-traditional finance will definitely fall first. If the economic problem is not big, the rate cut is too small, and the liquidity injection is not much, the non-traditional market reaction will not be very large, and there will be emotional negatives. Therefore, in the first stage of the rate cut, the market will be in a very contradictory state, that is, it is afraid of too large a rate cut, and it is worried that the financial risk will not be able to bear. Only when the amount of water released gradually exceeds the amount of water discharged, the market pool will raise its depth and have a greater savings value.
Our opportunity will not come from the first rate cut on the 19th of this month, but we have to observe the second or third time afterwards. Often from the third time on, it is the positive injection of real money. Whether it is recession hype or a soft landing, the sudden risks of the market and the reversal point of the economy will stop before the third interest rate cut. The cycle after that will be a disorderly pull-up state.
In the short-term market, the operation is extremely difficult and the error tolerance is extremely low. Without considering the option of "clearing the warehouse", it is still the best policy to stay away from the remaining garbage time. Livermore once said that good speculators are always waiting and always have the patience to wait for the market to confirm their judgment. We are the same, we should have patience to wait.