Range Traders Listen Up!

Good Morning.

U.S. Futures were slightly lower most of the morning but contained an underlying bid. Asian markets were closed and European markets are in slight disarray due to the German Election. Oil and Gold are both higher as traders start to anticipate another hurricane. However, OPEC is releasing more Oil into the market, trying to prove a point that refinery capacity is the larger issue rather than overall supply of the raw commodity. Many traders are closely monitoring the two day OPEC meeting.

Key stocks this morning: Nike (NKE) came in at $1.61 per share which handily beat estimates of $1.42, Sirius (SIRI) which raised is revenue guidance to $230 million from $225 million is selling off anyway, and Overstock.com (OSTK) reiterated guidance for full year 2005 and is also under pressure. We expect these stocks will likely find support midday and may provide good intraday long trades.

Fed Futures are still pricing in a quarter point rate hike for tomorrows meeting. The Fed is under tremendous pressure with recent data suggesting a pause would be unwise at this time. However, the political consequences of not acknowledging the economic damage that is being caused by Katrina, is an issue for Alan Greenspan.

Should the Fed surprise the market by pausing or even suggesting so in their text, the stock market would likely get a knee-jerk move to the upside. We believe the Bears would use that strength to sell-short in anticipation of the stock market resuming its downtrend that it has been in for the past few weeks. Until the decision is announced, short-sellers will most likely be too timid to get aggressive. Therefore, the lack of aggressive Bears combined with the hopeful Bulls should provide an underlying bid in the stock market. This makes an attractive environment for range traders who prefer to buy low and sell high.

The Bulls have one or two days left to play before the Bears make them pay.

Good Trading.

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