Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed Does It Again......

Stock-Markets / Stock Markets 2011 Dec 01, 2011 - 03:56 AM GMT

By: Jack_Steiman

Stock-Markets

This should not have come as a surprise to anyone. We've talked many times about the fed and the role of playing the savior. Not on my watch approach. He knew that if the Eurozone fell apart, so would our markets, and thus, the concerted effort with the world central banks to supply massive quantities of liquidity to help Europe out and keep the financial system humming along for at least a little while longer. Outside of our own back yard, the fed convinced England, Switzerland, Japan and Canada to join in and save the day. They agreed when they were made to realize that if the rest of the world goes down, so do each and every one of them. No one would be safe from the financial carnage that would take place. Not too tough a sell.


So the world joins in. A concerted effort is made to bring liquidity to the world, and all is well. That's not really the case, but for the short-term, it gives the smartest minds around additional time to try and figure out a solution to what ails the world. They have been unsuccessful so far, and thus, the reason for the inflation trade today, but they will continue to try to work out a solution that isn't upon us at this time. Hats off to the efforts, but ultimately, I don't think this was the best approach to take. My opinion is meaningless. It doesn't matter. The market, as one would expect, loved it. Now, the question bigger picture is what will this massive amount of liquidity do to the markets ability to move higher with force. More on that later. The fed did his deed today as he tried to save the world equity markets. As they say in hockey, kick save and a beauty.

The financials led the way today as you'd expect. They are clearly the biggest beneficiaries of today's fed action. (Goldman Sachs (GS), Morgan Stanley (MS), American International Group (AIG), Wells Fargo (WFC), U.S. Bancorp (USB), JPMorgan (JPM), and other financial institutions had a great day today.) Massive quantities of free money will do that. The inflation trade also helped the commodity world quite a bit, although gold and silver did under perform in a big way. Those trades being full.

The bubble has already popped on Silver. Is gold up next? Gold should have exploded today. It barely moved up based on this type of inflationary news. Makes you wonder. The overall market participated in one way or the other. The internals confirming the move, and a definite follow-through from Monday's big blast higher. I've spoken many times about how essential it is for the internals to confirm a move of such magnitude. If they don't, it puts the entire price move in question. Fortunately for the bulls, they got what they needed from those internals, thus, today counts as a real win for the bulls. Hardly a place for the bears to hide today. No safe trade for them. They basically just covered some portion of their short plays and moved to the sidelines. A solid day all around for the bulls thanks to intervention, which, of course, is fine with them.

The S&P 500 took out some very important resistance today. There was a gap top at 1215, and also, the 20- and 50-day exponential moving averages at 1212 and 1215, respectively. The only way those levels would go to those levels would be on a gap. So many key resistance levels at the same price require big gaps. We got it today, so now it's about clearing the 200-day exponential moving average at 1233. Clearing it with force, not just by under one percent.

We did not accomplish that today, and so the bulls still have their work cut out for them before they can feel a bit safer about things. 1195 on the S&P 500 was yesterday's previous close. This level should act as very powerful support on any selling to come to unwind overbought short-term oscillators. It wouldn't be great action if 1195 started to erode away. We'll have to watch it closely for more insight. Technically, today's move is a positive. Clearing that key 1215 level was huge. It would be best if that level held any selling until we can try higher. Good action from the technical side gives the bulls hope, but above 1233, we have to deal with 1265/1275. Nothing will be easy for either side from here as there are now two big open upside gaps for the bears to have to deal with.

Japan tried this eleven times, and it still ended up with an 80+% bear market. Quick fixes led to huge rallies, and then failure. Today's concerted global effort does not end the problem. It buys time, but it's only a bandaid and not a solution. Ultimately, a solution will be needed to allow these markets to go appreciably higher over time. No solution likely means no bull market. You still need to be defensive until we can blast through to higher levels that tell us the worst is behind us. We're a long way away from that reality. The market has more of a favorable tilt short-term, but it's hard to know how long that can last. We watch the charts and let them talk to us as the weeks go by. I would not get overly bullish despite the efforts made on the world's financial behalf. Take it slow and easy as we watch for signals from both sides.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 21-Day Trial to SwingTradeOnline.com!

© 2011 SwingTradeOnline.com

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in