Why I am not Excited about Friday's Move...

I strongly believe that Bernanke let down Wall Street on Friday. He announced absolutely nothing new and in his discussion of potential policy action, he indicated he is unwilling to pursue any of the mentioned alternatives at this time. He quite simply does not believe that the economy is headed towards a double dip, but rather this is just a temporary slow down in the midst of a recovery. Given State/Local cut backs and stimulus run-off, I believe his point of view is rather naive and based more on historical experience than current conditions. I do not believe that Friday's move was in fact the result of Bernanke's speech, but rather purely technical and likely temporary factors... 1. support at 1040 S&P and 2100 Nasdaq, 2. GS call that a 2.5% 10yr yield tgt was reached on the 10yr and as a result an advised sale of treasuries, 3. rebound in the AUD relative to JPY, which is part of an important S&P/(AUD/JPY) correlation trade. JPY and treasuries were overbought, some reversion was expected. Support was strong and a bounce was in order. You saw an additional move in the overnight futures session on Sunday night when the BOJ announced an emergency policy metting. The Yen moved lower and S&P futures moved over 1% higher at one point. As soon as the Yen reversed when the BOJ did not announce currency intervention, the S&P futures also lost their enthusaism. There may be slightly more upside Monday, however I believe that eventually, and likely soon, 1040 will break and 1010 retest will be in order.

Disclosure: No Positions