"Home buyers face tough decision
Fed announces 17th consecutive quarter-point increase

By George Avalos

CONTRA COSTA TIMES

The Federal Reserve campaign to raise interest rates, coupled with a cooling housing arena and an economy that shows signs of slowing, has left prospective home buyers at a crossroads as they ponder their mortgage options.

On Thursday, the Fed announced its 17th consecutive quarter-point increase in short-term interest rates as the Central Bank attempts to curb inflation yet make sure it does not choke off a strong economy.

Yet the Fed also hinted that its string of increases in rates, now underway for two full years, could be nearly at an end. That possible interpretation sprang from a subtle change in the closely watched statement that accompanied the Fed's move to rate rates a quarter-point to 5.25 percent.

As usual, the shift in interest rates is expected to nudge costs higher for consumer financing vehicles such as adjustable rate mortgages, home equity lines of credit, auto loans, and credit cards. Eventually, the effect of the Fed's actions is expected to spread to longer term fixed-rate mortgages.

So when consumers arrive in the offices of East Bay mortgage agents, these prospective customers have the reality of rising interest rates and the Fed's actions on their mind. They are trying to figure out how much -- or if -- the Fed's current and future moves might affect their mortgage."

""Our customers are very aware that rates are increasing," said Christopher George, president of San Ramon-based CMG Financial Services. "But they don't only look at what the Fed might do. They also look at what fits their budget and that rates have been going up.""

You had a plan and that is what matters. When you have a plan, you think clearly and can get back in at 2-30 and that is why you win.

Without a plan, you lean with the mei get whipped and become a deer in the headlight when you need to react.

You played it perfectly if you ask me.

Timing the gold market is extremely difficult.

It might be wise to hold some gold for the long term (5 years+) preferably physical gold. You can then add some GLD, XGD etc. at pullbacks and sell some on rallies.

Has $600 become the new support level?

EJ-

Not yet. 572 looks like very good support. It's going to take some closes and holds above 600 in order for it to become support. Still resistance in my mind.

Last time it got here it played around in a fifteen dollar band before decisively penetrating. Took about a week of action if I recall correctly.

Watch what the miners do when they reach resistance at about 145 XAU. That'll be the tell.

Where's optionoracle? He has skinned this thing perfectly. Kudos, man. He bought when everyone else was puking, including yours truly.

I plan on being more aggressive in the fall with the miners. Have what I want for now.

Oil chart tells me it may make a move to 77-78 for the summer, 80+ on a hurricane spike.

Long GLD, miners and everything else hedged to the hilt.

Thanks Mark. In the a.m. I trimmed some of my miners before the announcement, missed some upside but bought back in. Just trying to play it safe. Long GLD, miners, and holding bear funds and BRK-B. i am not "all in" because I am uncomfortable with the need to be nimble in this turbulent market. I'd rather sit on the small positions I established during the plunge and wait for fall to begin to add. I ask about $600 because I saw that as resistance and since we've moved through it wondered if you saw any basing there that would give support. Thanks again, and Thanks Bill.

I scaled out before the announcement as well. I don't think we'll break 600 without a fight, so I'll be watching closely for either another selloff, or signs of demand pressure building among the larger-cap stocks.

Bill-

As a consolation, some were able to take 4% out of the Market as a result of your Intel (INTC) recommendation. (small but significant in this trading environment)

Your Blog and it's course: Trading 101 have been superlative in teaching, we the people, how to trade the volatility of this near-term Market

Premarket: dollar weak with Euro spike up around 13:30 GMT; oil up, gold & silver up.

Maintaining long core positions in weakening dollar, miners and GDX. Watching MarkM's XAU.

MarkM-My general feeling is gold emerged from a multi decade bear market several years ago and that the primary direction is up. However, as the rate of change began to increase rapidly (the slope shows has several distinct inclines leading to the near parabolic ascent from March 10th)a prudent course of action was to use a trailing stop to protect these substantial gains. I was lucky enough to get in at a short term bottom and would look to scale out of those positions between 61 and 63 GLD. There needs to be more work done before a sustainable bottom can be made IMHO. Need a test of 550 and probably a brief spike below to wash out weak longs (490-530 seems a reasonable level). The stock market bulls get a reprieve for a couple weeks into mid July before the bear reasserts himself-maybe a run to 1290-1300 in the SPX.

optionoracle-

Agreed with all. I will expect another smack-down from those interested in lower gold prices. I thought the retest would have come already. I was thinking w/i two weeks of the low but it was just a guess.

Gold very frisky today! Now to hold the 600 level.

Rate decisions will be out of the Fed's hands soon I think. Inflation not going away. Fed is not that interested in inflation per se just inflation EXPECTATIONS.