Note Added 9:39 AM: Housing Starts are an upside blowout to 1.091 million, the magic million number, but Mortgage Applications are down. LEN earnings beat, so there are lots of mixed signals in housing. Global bellwether FDX missed on earnings. F guides lower moving forward. The day begins and XLF is 21.21 well above the 21 danger level while the GTX is 4783 under the 4805 bull-bear line, thus, status quo, sideways slop continues. Equities are higher to begin the session, the SPX is 1784.67, above the 200 EMA on the 60-minute at 1782.91, so signaling bullish markets again, but the 8 MA remains under the 34 MA on the 30-minute, bearish, so call it all sideways drama as everyone waits for Bernanke to bring the tablets down from on high at 2 PM. TRIN is 0.88 favoring bulls. The 2-year is up to 0.35%; was at 0.29% a couple days ago.
Note Added 11:56 AM: The bulls spike GTX to 4802 but it falls on its sword unable to attain 4805 that will unleash market upside. The bears are not much better, pushing XLF down to 21.12, at the lows, but still 12 pennies away from unleashing market mayhem. Hence, sideways with the Fed decision about 2 hours away. The SPX is under the 200 EMA on the 60-minute at 1782.82 and the 8 MA is under the 34 MA on the 30-minute favoring bears. The dollar/yen is lofty at 103.15 favoring bulls keeping the stock market elevated. TRIN 1.17 now moving higher starting to favor the bears. The 10-year yield moves to 2.90%.
Note Added 4:05 PM: Chairman Bernanke hits a home run today. Creating a $10 billion taper, in itself a surprise, but the yields did not pop and equities drop, instead the opposite, yields are flatish to lower and equities sky rocket with the SPX over 1800 and the Dow over 18K again. SPX and Dow close at new highs but do not print new intraday highs. Short traders ran for the exits creating a wild upside short squeeze. Bernanke stressed that low rates will continue, basically forever, so traders latched on to this and ignored the taper. This is a big day in market history. Bulls will likely drive the bus with Santa Claus for a rally for a few days due to the upside momo. Keybot the Quant turn bullish. The VIX dropping under 14.20 is strong bull fuel. If the VIX recovers above 14.20 tomorrow, that will be the first indication that the bull party is short-lived. Equities will float higher with VIX sub 14.20 and will receive further fuel if GTX regains 4805. The put/call ratios will be interesting this evening. Nothing changes in the markets; the bulls are now actually more complacent and relaxed, than over the last 6 weeks, not the least bit concern over any market selling occurring at any time forward.