Sustainable rally? – December 11 FED rate cut

The market rallies in expectation of a December 11 rate cut.
And, if the FED cuts that will rally the market.
Especially if they should cut by 0.50%, that will bring a huge rally.
Yet, the recent rally decreases their need to cut. These forces work in circles.
Perhaps the rally will continue until December 11, so they decide not to cut after all and the climax is reached?

Can the rally go on until December 11?
That is another 8 market days…
I find if difficult to think that the market can sustain this for 8 more days. If it does we could rally another 2-3-5%.
Yet, I think this will be difficult.
Perhaps therefore the correction comes now, next week.
Somehow the market is aligning itself for a peak moment, followed by a correction

Perhaps this is the rally the marks the last time for now that the market is discounting now future “good news”.

Another question is if the financial industry will report their Level 3 losses in January or in March/April.
This is the trigger that will give the correction in the market.
They should in the name of transparency disclose it in January when they give their 2007 Q4 numbers and their projections for the comming quarter.
Yet, bonuses are paid out in the first quarter so they might want to wait to make sure they get their bonuses paid first.

I have to admit I am moving some put possitions from January to April and even to January 2009.

We are living in interesting times indeed.

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