Keystone's Midday Market Action 3/26/12

Chairman Bernnake delivered a new batch of crack cocaine (quantitative easing) at 8 AM EST. As discussed on the weekend, any mention of QE3 would result in a rocket ride higher, and Bernanke came out with guns blazing.  He referenced an abnormal job recovery that may lead to structural economic problems moving forward and the 'Fed will remain accomodative' with quantitiative easing.  Futures were flat before his words, the dollar was up, after the magic words about further drugs and booze on the way, the futures markets sky rocketed higher, the dollar plummeted turning red as Bernanke beat the dollar relentlessly with a baseball bat, gold, oil, commodities, copper, which was key today, and of course equities markets, are all substantially higher on the money printing news.

Markets are moving up on light volume in recent days and the Fed's easy money carries the broad indexes higher today.  There is a macro price to be paid in the months ahead for the Fed's actions but in the short term, today, the bull party is now in full force.  The SPX punched up thru the 1399 no problem, then took out the 1403 and 1406 resistance levels, then 1410 with the 1413 R holding, for now.  The HOD thus far is 1412.06.  Copper and commodities are higher on the weaker dollar.  Utilities, UTIL, are climbing as well today printing 455 currently well above the 446 danger level for this week.

Tech is leading the way higher with the Nasdaq up more than the SPX so this provides street cred to the bull move today. Interestingly, AAPL is flatish.  Thus, call this the Bernanke EOQ1 Rally, he obviously wants to elevate the broad indexes at all costs.  His intent is to create the wealth effect among folks so they can help kick the economy into gear thru increased spending since they feel better and better about the economy.  The obscene move higher today, however, purely due to the leader of the Federal Reserve Bank willing to drop money from helicopters, is hardly encouraging moving forward. At least Bernanke is consistent, often mentioning the Great Depression and the mistake made was the Fed not acting strong enough back then.

To add to the drama, Keystone's algorithm should have flipped back to the long side and took the whipsaw loss, but, oddly enough, what isn't these days?, the quant probably wants to see the SPX over 1412 today to commit back to the long side, and instead continues to idle along on the short side.  So watch SPX 1412 closely today to see if the bulls continue to drive higher, if so, Keybot the Quant will likely take rejoining the bulls. The SPX is at 1411 only one point under. With tech leading today the markets would be expected to float upwards.