Market Expectations For the FOMC

We have to remember the market had high expectations for the last FOMC meeting and the Jackson Hole speech, they were tossed a small bone and they were satisfied, they didn't get anything like they were expecting, but now it is pretty much assumed that the Fed will at least engage in Operation Twist by selling short dated 2 year treasuries and investing that money in to 10 years most probably to hold down the 10 year rate which is around 2%, it' also the rate that influences most consumer loans.  The market is said to have priced this is, but there is no end to the speculation of what the Fed will do and all from experts in their field. From QE3 to nothing and Operation Twist being the most likely. Then there's the size of anything they might do.

I won't get in to the specifics, but I can point you to 200 different opinions.

I just want you to remember and long term members have seen this many times, the initial knee jerk reaction which can be 30 minutes or two days, is almost always the wrong reaction, meaning it tends to reverse. I suspect this is a function of the market's tactics more then reflection, but keep that in mind.

For now, I am continuing to hold all of my short positions, nothing has changed in the model portfolio and this is because of how bad the 15 min hart looks. However, if you entered the trades around the same time as most of us, you re at a profit and if you feel like taking those profits or partial profits, YOU must do what YOU are comfortable with. You should have a decent profit at this point. We don't have to always be in the market which is our main advantage over Wall Street. So consider what you're comfortable with. I have a very high tolerance for risk, but trades should not keep you awake at night, if that is the case, you may have a problem with position sizing/risk management.

Just an FYI as we move closer to the maelstrom.