Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fed Speaks... Stock Market Listens....

Stock-Markets / Stock Markets 2011 Nov 03, 2011 - 02:21 AM GMT

By: Jack_Steiman

Stock-Markets

And what it heard it mostly liked. He talked about how our economy is not in all that bad shape. Not in very good shape, to be sure, but not so bad either. He talked at length about the headaches in Europe, and how those headaches could adversely affect all of us here. That was the troubling part of the speech, but he also said he has tools available to him should the worst case scenario take place in Europe in order to protect the United States from crashing into a recession. He didn't state what those tools were, but somewhat hinted it wouldn't be a QE program, which I think the market liked as it showed no real panic about the condition of things here at home. It was good to hear him say that things here weren't as dire as they were in previous months. He was clear to state that we have a long way to go to get where he'd like us to be, so we shouldn't feel too good about things.


He was clear to tell us that the worst seems to be over for now, and that it was up to each and every one of us to behave appropriately by paying off debt and having a real plan on how to make sure we can pay our bills on time, and to not act in a fashion that makes things too tough for us financially. Basically it came down to telling us to be responsible for what we do and to not over extend ourselves as we did before. He made that point a few times. Telling us to make sure we don't act as we did in the past so as to create more problems. So the fed spoke today as the market definitely listened, and it seemed to like what it heard overall. The big headache still being Europe, but hopefully, that will resolve itself sooner than later with the measures already in place and other measures to come.

The market seemed to want an announcement of another quantitative easing program today from the fed. It didn't get it, and acted like a disappointed child not getting more ice cream. The fed said things weren't that bad here economically, and thus, made no mention of a QE program. This caused the market to sell off over one hundred points of its earlier gains. It seems as if the market is begging for something it doesn't need at this moment in time, and kudos to the fed for not doing it. After the disappointment wore off, the market rallied back some into the close, although well off the day's highs. Nothing great and nothing bad. The market needs to realize that not acting out of desperation isn't a bad thing. It always wants more, but gladly, didn't get it today.

The market should trust the fed's actions and know that he would be the first, based on past history, to put in a new quantitative easing program, if he really felt it was a necessity. He has acted rapidly in the past to put these types of programs to work, so now the market should trust his actions, or lack of them, happily. The recovery at the end of the day leaves things wide open for the market in the very short-term, but that's how things are these days. The market wanted more candy today, but got only a few pieces of gum. Not happy at first, but then realized that gum isn't a bad alternative. Neutral for now.

The market fell hard the past two days, but really didn't cause anything negative in terms of the technical set-ups. It's easy to just say the bullish case is over once you sell hard for a few days. That's understandable considering the fundamental backdrop we're all dealing with from Europe on a daily basis. However, if you study the leading stock charts and the leading index charts, there still isn't anything bad in terms of technical breakdowns. The charts aren't as healthy as they now have gaps to deal with, and I respect that, but we all know those gaps can be taken back fast, if the right news were to hit.

On the other hand, if the wrong news hits, such as a default, you can kiss the good technical set-ups good-bye. There was a lot of good support levels created on this last strong run up in the market. That won't be easy for the bears to just make go away. Some of these gap ups occurred with strong internals, such as volume and powerful advance-decline lines. So yes, the bears did make some headway, but no, they have not made the type of headway that guarantee's the market's demise. Europe will have a lot to say about which way this breaks.

There is a lot of support on the S&P 500 on the way down from here, but the key level of support for the S&P 500 to hold is clear as can be. It's the 50-day exponential moving average currently sitting at 1210. If the bears can remove 1210 with force then you'd have to hand the ball over to them as they would be in clear control. I'm not talking just your average daily breach of this level. I'm talking about a forceful move that can hold for a few days, thus, giving the bears more confidence.

When the market cleared 1260 it didn't last long, and thus, no confidence was there for the bulls. If the bulls can take back 1253/1260 with some force, it would be the second time through, and likely give them more control of the action short-term, although we all know that the daily news out of Europe is what's really controlling things. The market may want to play ping pong for a while here as it awaits the final chapter from Europe. Be patient, meaning not too much exposure either way in such a whipsawed environment.

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