MARKET CORRECTION? Rally out of steam?

China did its thing again.. raising interest rates by 25 basis points. How will this affect the markets?

Commodities will be hammered as chinese companies will slow down their growth pace. China is the main driving force behind the latest commodity rally.

How will CHINA interest rates fight against USA QE2?

25 basis points is alot. QE2 may probably shave off 10 basis points and also lower long term lending.

This is a hard tell. That’s why the market is still uncertain now. But it is obvious that the rally has ran out of steam. Today’s drop was too drastic for anyone’s liking. That’s why it got supported at its support level.

At this point, flash traders might be switching on their short selling program. A program that they have switched on a tad too early on 28 SEPTEMBER and failed miserably. Now they might be switching it back on again.

Not trying to scare any one, but it may be worth it to hedge your long plays by buying puts, or selling calls. The market might be peaking here. Either take your profits now, protect them by buying puts, or endure another mini correction.

Happy trading. SHORT BIASED again today.

Oh and BANK OF AMERICA’s earnings was wonderful. Will wait for a nice setup before buying more of it.