By Jeff Pietsch
This September, equities logged their best monthly performance since
April, and their best September since 1998. Once again, Ben Bernanke
and the Federal Reserve came to to our "emotional rescue" with a
surprise 50 b.p. reduction in the Federal Funds Rate. The markets
haven't looked back since (the Nasdaq 100 in particular), and once
again the indices sit near their respective prior highs. Meanwhile, the
dollar continues to plummet as commodities explode higher.
By
the end of the month we were in a "bad news equals good news"
environment, with every little disappointment signaling the
possibility of further rate cuts ahead. Today, the Fed's William Poole
threw a little cold water on that expectation, but that apparently is
part of his job description. Looking forward, it seems to me that the
market may have set itself up for a small pullback presently based on
the recent strong gains, increasingly negative news cycle, and local
resistance at the prior highs.
The Standard & Poors 500, Dow
Jones Industrial Average and Nasdaq 100 may be traded through ETF
proxies, including the S&P 500 Index - Spiders (SPY) or iShares S&P 500 Index (IVV), Diamonds Trust, Series 1 (DIA) and PowerShares QQQ Trust, Series 1 (QQQQ), respectively.
Sentiment: Positive
Volatility: Reduced
Direction: Positive
click to enlarge
Disclosure: Author holds a long position in some of the above-mentioned securities.
