Whooooosh! A little disappointment brought stocks down in a huge hurry yesterday. Permabears shouldn't get their hopes too high...er, low, though, since the nearly 300-point fall in the Dow didn't violate a single important support on the daily chart. In fact, we'd be surprised if the mass mental illness that drove shares to near-record highs in the first place did not reassert itself with a vengeance as early as next week. Remember, free-falling selloffs such as we witnessed yesterday are engineered by buyers, not sellers. The latter played a mechanical role, of course, but it is the specialists who determine a price at which they can feel blissfully confident about unburdening the panic-stricken of their unwanted stock. The gutsy trader could have made a years' lucre in mere minutes if he had guessed right about the size of the rate cut that was coming. Hours before the Fed announced a 25-basis-point gift, Wall Street appeared to be betting that it would receive an even more accommodating 50-point cut. How could you tell? Well, the shares of Citi, for one, rallied off a morning low and kept going, accelerating to the upside until the moment of the announcement. We've always considered Citigroup's price action a peerless indicator of what the sleazy money is doing, so deftly is the stock manipulated on a day-to-day basis. In this case, though, the buyers appear to have guessed wrong. We say that having guessed wrong ourselves. Assuming Citi's accelerating rise yesterday to be predictive of a 50-point cut, we loaded up on call options with the intention of selling them into a rally spike. Instead, the stock dove so sharply on the news that bids for our calls melted away before we could get off a closing sale. Rally Fed Speculation In retrospect, it seems obvious
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