Chairman Bernanke, in all his Barnum and Bailey bravado, steps in front of the cameras, flashbulbs popping as if a 1940's starlet was flashing a smile, at 8 AM EST this morning and ignites the fuse firing off a bullish rally cannon. 'Accomodation' is the new hip word. If you hear it, be sure to run out and buy a few shares and send Bernanke a thank you note. The SPX was up 19 points; it is surprising it was not more. Bernanke is a magician with many tricks up his sleeve; low rates until 2014, hybred housing plans, sterilized QE, and of course QE3 itself, as well as many other surprises. Each mention provides a market punch higher, exactly at the right time. Perhaps traders will come to realize he is more of a sly showman than astute central banker?
Volatility was up today while markets were rallying strongly although closed down after the late day push. NYAD spiked up over +2000 so the markets need to pull back quickly to some extent to burn that energy off. TRIN is at 0.49 very uber bullish so the markets need to snap back to remedy that low reading. NYHL continues to diverge which is bearish; the NYA moving higher as the new highs decrease. Keystone's SPXA150R is back over 90 verifying the bullish move today so the bulls remain in control as long as SPXA150R stays above 90. When price drops under 90 that will signal selling ahead as long as it stays under 90. SPXA150R over 90 is an excellent place to short the broad markets.
Copper and commodities continue to be the first tell if/when the markets reverse so watch JJC 49 level, now at 50, and CRB 312.40 level, now at 315. Bears got nothhing unless they can drive one of these two lower. For the SPX starting at 1416.51, the market bulls closed at the highs so if the futures are only a hair green tomorrow morning there are several more spoo handles higher on tap. The SPX is now close to the 1425 gap fill. The market bears need to retrace the rally today, not impossible, but is improbable unless Bernanke changes his mind. Thus, bears will focus on pushing the dollar higher so copper and commodities can retrace lower.
Case-Shiller at 9 AM will probably provide more gloomy housing news but the markets do not care since there is a big party going on with the Fed's booze overflowing the punchbowl. Consumer Confidence at 10 AM is a very important number and one of Keystone's monthly faves so a market pivot point will occur at that time. Chairman Bernanke speaks after lunch tomorrow; what does he have in store this time? The 2-Year Note Auction goes off at 1 PM. LEN earnings are key as discussed on the weekend. KBH disappointed so LEN either confirms all the dire housing news, or, instead, supplies a pint of Southern Comfort for that bullish punchbowl. Markets are very unstable and require close monitoring.
well, i sure thank bernanke. Long since low 1380s, cause since when that leave breached 1420+ would eventually be in the cards! Now that keybot switched to long at 1412, I am even more confident and way ahead (for once! ;-) )
ReplyDeleteexcellent comments by the way. Remember that there's still trillions of liquidity sloshing around; can't fight that, so enjoy and take some profit of it. The consequences of all this crack pumping we all know of course, but for now we'll close our eyes, pretend we know nothing, pretend our noses are bleeding and continue to BTFD, until proven otherwise.
I got fooled at the 1300 dip and 1340 dip, fool me once: shame on you. Fool me twice: shame on me. Now I have loaded up my wagon, popped a cigar, use the bears as my rug to keep my feet warm (and of course put some stops in 'cause I ain't stupid: being from Amsterdam originally I've seen enough crack junkies and how the end up: none good...)
Hello Arnie, good on you, many bullish traders sighed relief at 8 AM EST yesterday when Bernanke signaled the money printing presses to rev their engines. Watch out for complacency, however. A bump like yesterday's is exactly when the markets bring in any doubters, and yesterday many bears capitulated and gave up unwilling to endure any more pain. Typically, this is when it all reverses.
ReplyDeleteAs long as you have an exit strategy you are in good shape. And Keybot can confirm the downside moving forward, which who knows, it may occur as soon as today, you never know. Keystone's 80/20 rule says when an 8 level is breached typcially the 2 level cmes, so the 1380 is indeed leading towards 1420, almost there already.
The QE talk from Chairman Bernanke yesterday is more of a psychological thing since i tis the velocity that is the problem. Printing more money that sits around at the banks and does not see circulation does not do any good. The automatic assumption is that the minute QE is mentioned markets run higher since they expect the velocity to follow along and the money to multiply thru the economy which it typcilly does all the time.
However, the problem now is that money sits at the banks, folks do not want loans, even those that due, new regulations and banks that are still not healthy despite what you hear, are hesitant to provide loans, only providing loans to those that do not need them. Without all that free and easy money multiplying as the velocity increases, there is no positive effect on the economy, the economy continues in a funk, but, markets catapult higher because the velocity factor with QE is considered to be a given.
Sounds like you are in good shape, keep on trucking, watch Keybot, the 8 and 34 MA cross on a 30-minute SPX chart and watch to see if SPXA150R moves under 90 to indicate market selling. Stay on guard and monitor the markets closely since the broad indexes are very unstable and something wild can happen at any time.