Keystone's Market Action 4-28-11

The white smoke fades today after the Chairman’s magician show.  The dollar took the worst of it and in turn has sent gold and silver jumping again.  If there is one thing that Bernanke probably wants a do-over on, it would be the talk of a strong dollar policy.  Ben has to conceal his laughter as he utters ‘strong dollar’.  We know that some Fed members like Bullard and Lasher are hawkish.  The vote was unanimous which means all the Fed members had a pizza party and agreed to play nice.  Typically, you have to give to get.  If the hawks gave, to get some type of inflation shout out during the press conference, they should demand their money back.

Bernanke attempted to say that inflation was a hair higher but even this tiny attempt to recognize inflation went unnoticed and markets interpret the Chairman to say ‘let the good times roll’, so the good times are rolling, and the buck is taken out back.

Financials and copper are the only bearish leaning sectors now and in fact, the financials are favoring the bull side of the bull-bear line as this is written.  Watch XLF 16.33, whatever side price moves will be in concert with how the broad markets move today.

Copper remains bearish and it is a recognized market leader, but it a lonely leader of one, itself.  Consider markets to be unstable.  Volatility, VIX, now has lost the 15 handle again, trying to regain that level now.  CPC put/call hovers around the 0.7’s, there is no fear in these markets; traders are in agreement that the markets will not stop going up.  (contrarian signal typically)

The POMO pump spigot was turned back on today, and the financials, XLF, were pushed higher between 10 AM and 11 AM as the Tuesday chart and post discusses, and today there was success, as long as XLF can maintain 16.33.  Financials must firmly rejoin the bull camp if markets want to head higher.  Very simply, use XLF as your gauge today, if XLF is above 16.33, then the broad markets will go up, if the XLF is below 16.33 today, then the broad markets will sell off.