Wednesday, March 18, 2009

Bernanke Rally

The market was in pullback mode on Wed. up until Bernanke came in and announced the Fed will buy over a trillion dollars worth of mortgages, debt and US treasuries. Yeah the stock market went up but the real bid was caught in the gold market, foreign currencies, and bonds.
Gold, after being down on the day near the 885 mark reversed and closed higher up around 950! The Euro went from 1.31 bid to 1.35 in minutes. These are moves that usually take weeks or more happening in minutes today. The treasuries had the biggest move up since October 1987! This tells you that it was an important day and people think that inflation will be a factor in the coming years, but are more willing to participate in risk, namely equities.

As for the ES futures, they hit a high of 800.50 and then retraced back to the 780 mark before closing up at 790. This is very bullish as I heard that trading desks saw more than just short covering in today's move and thats something new. I have been saying for the last week that this rally feels different and may be the real deal. But we just moved up 20% in less than 2 weeks. Expect a retracement coming. It may not, but you should expect one and I would actually prefer to see one maybe down to that crucial 741 mark once again. I do believe we can build on this rally but after some profit taking.

For Thursday, the pivot is at 784 and price is right about there tonight so the pivot is the line in the sand. If we open above then watch for that pivot to be support with obvious resistance back around today's highs of 800. If we lose 784 early then we may retrace more of today's move. But I tend to think Thursday could be a pause day more than likely.

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