A new reader asked me, "why the 'rear-view mirror' tag line?"
Well, it's a little nod to my prior life in the consulting business, where we joked that 80% of our reports constituted "rear window watching." The second half of the joke was that we "charged by the pound," so the more rear window watching the better!
Let's face it, 80% of stock commentary falls into the same realm, and in the context of this Blog's premise, it seemed a good fit. If the markets are a discounting mechanism, developing an intuition for how they may respond to news within a given sentiment and volatility regime is as critical as respecting observed price action.
This week's Super Fed Tuesday action in the SPY was just the latest example:
While a number of talking heads predicted a major decline in the event of a 50 b.p. reduction, one had to think that there was an equal to better chance that there were going to be just a few too many scared shorts for that to happen given the market's August 17th response to the window reduction of the same magnitude, at least on "event day."