Where are we going?

After Fed's emergency rate cut of 75 basis points, markets have bounced. Last night European and Asian markets collapsed at least 3%. Surprisingly, the U.S. Markets are holding well, rather +74 on cash Dow now. Where are we going from this point? We have a FOMC meeting this week. There were some talks about the fact that the emergency cut would have not needed. Thus, we'll not see another cut this week. If the Fed doesn't cut anything this week, it'll be another disaster. I think the Fed will cut .25%, which will result in still a significant drop in stock indexes with a disappointment. .50% cut would be too much after cutting .75% although that will likely keep markets steady.

So many people are still long markets. What I mean by that is not from traders but from our neighbors or investors. There is a big cycle in economy. In the past a few years, money was in real estate markets and that was moved to stock markets, I would say, since 2003. Smart people slowly started moving their money from real estate to stocks in 2003, where they dumped theirs before real estates picked in 2005-2006.

Investors who saw a massive sell off last week are very nervous. They are hoping that markets just go higher and higher from this point. Their psychological level is that low I think. After the FOMC, we'll see a big sell-off, funds-run, stops run and a new low. After that, I say we'll make a steady higher high. We've seen so many times that after I take a loss, markets go my way!

Markets are designed for 'normal' people to lose money.