Despite a better than expected Housing Confidence Index it was all about the Fed Chief. Chuck Schumer said it best and it was what got the market off the lows. He basically stated that DC will not get its act together and the Federal Reserve must act. From that point forward the market moved off its lows as volume surged in the market. Regardless of your view at this point the market wants to move higher in the short term. Late day selling did put a cap on the day, but the overall gains in the market certainly paints a bullish tint. Until we get further selling, this market wants to move higher.
The market clearly expects quantitative easing to help support it going forward. It is quite sad that this market needs the fed to print money to support this market. Earnings season has not been stellar and many stocks have missed their estimates. At this point, we cannot ignore the price action simply because we think the economy is in a tail spin. For now, this market wants to move higher and we'll be moving along with it. Do not fight the trend.
Ben Bernanke moves from the Senate to the House tomorrow where he'll face even more questions from Congressmen/women. Unfortunately for Ben, he'll like face the same lame questioning he received today. Majority of the questioning was grandstanding by both parties and did not ask any very pointed questions. Essentially, what we got today was Congress and the Senate will not do anything and they expect the Federal Reserve to print away their problems. Elected officials are terrible and Schumer pointed the problem out.
The trend is your friend and do not forget it. Tomorrow may bring a change in trend, but for now this market wants to move higher on the high of quantitative easing…part III.
Do not fight the trend no matter how much you believe you are right. This is precisely why we cut our losses. Ride the trend higher and get off when the trend reverses. Big Wave Trading is your guide.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.