SPX 5-Minute Chart Highlights 11/28/12 Dramatic Reversal Rally

The chart illustrates yesterday's trading drama.  The SPX dropped from 1399 to 1385 during the first half hour of trading.  The euro jumped higher and also Speaker Boehner discussed the fiscal cliff in optimistic terms. The SPX recovered sharply off the bottom then drifted lower into President Obama's noon speech. The SPX dropped three handles as the president spoke but shortly after trader's realized that he promised a solution to the fiscal cliff by Christmas so markets catapulted higher. Do you think the fiscal cliff negotiations will end happily within three weeks time?

Markets flattened out again thru the early afternoon and then the Wall Street Journal (WSJ) released an article talking about more bond-buying and quantitative easing to replace Operation Twist which will likely be announced at the 12/12/12 FOMC meeting (that is an interesting numeric; 12-12-12, twice 6-6-6). Jon Hilsenrath always appears to have the inside track at the Fed so when his articles are released the markets always rally on the money-pumping news.  The crack cocaine created the third thrust of the day from 1402 to 1410. Thus, the SPX dropped 14 handles, then recovered 25 handles, in all a near 40 handle move from bottom to top in one day's time, a 3% move for a major index within one day's time, truly remarkable action. The power of words is clearly visible in the chart above. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.