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Market Hiccups; AAPL, Bernanke Still Dynamic Duo

The huge risk-on rally had a little scare today from the FOMC minutes, Spanish debt auction, and SNDK earnings warning. SPX lost only -1% at 1399 close, up 30% from its Oct 4 low.

Obviously it's going to correct sometime (April is usually a good month for stocks, followed often by "sell in May").

But today's FOMC minutes notwithstanding, I think the odds still are that Bernanke will again hint at more monetary easing if/whenever he deems that necessary.

After all, that's been Bernanke's game since Sep 2008, it's all he's got, so why would he change it, unless/until he thinks the economy is more self-sustaining?

As for Spain and the other European peripheral countries, they are in "extreme difficulty," as Spain's Rajoy said today, with huge unemployment rates, some over 20% and near 50% for their youth.

Their problems will be around for a long time, impacting financial markets sometimes more than at others, mainly due to how those affect the financial system.

ECB's 1 trillion euro LTROs were intended to directly save Europe's banks, these nations only indirectly (see my Dec 22 "Draghi as Euro Santa Claus a Big Deal," Dec 21 first LTRO kicked off huge risk-on rally).

As I've said a number of times since Oct, there has been no serious organized opposition to bailing out TBTF banks, in Europe recently or in the U.S. in 2008-09, and as long as that's the case, periodic market scares have been contained by kicking cans down the road.

As for SNDK, one commodity memory company does not a trend make. With 1Q earnings expected to be flat, and margins perhaps peaking, each key earnings report in April will be even more closely scrutinized than usual.

If those reports don't produce some hope that earnings growth will pick up, then the market may be much more vulnerable to a significant correction, perhaps starting near the end of April.

Of course, there are always tail risks, e.g. from Europe or oil, so as I've said many times, why invest without a net, when the low VIX makes buying some put insurance cheap?

A few quick charts. AAPL obviously has been by far THE bellwether stock in this bull market. So far it hasn't corrected even slightly, as analysts are playing can you top this with their revised price targets.

Until/unless AAPL does significantly correct, bulls probably are going to feel pretty strong behind their dynamic duo, AAPL and Bernanke (Bernapple?), believing the former will keep going up, while the latter still has their back, the game of "heads central bankers win, tails bears lose" that I've been writing about.

XLK tech is one of three key sector ETFs leading the U.S. market (XLY consumer discretionary and XLF financials the others). XLK held initial support today. It has lost a little momentum since early March (21d ema below the trend line), but is still very strong.

EEM emerging markets should be rather worrisome for bulls and market technicians, but most of both ignore it. EEM is in danger of forming a rounded top if support doesn't hold, which would reflect a negative change in global market mood. EEM has been losing a lot of relative strength to SPY since Oct 2010, which so far has helped the latter as a safer haven.

Finally the % of NYSE stocks above their 50-day moving average is lower than bulls might want to see, chart not shown. So far that hasn't been a problem for the market, since mega-caps, especially AAPL, are leading it.

LEFT CLICK on charts to enlarge.