Thursday, September 15, 2011

Twenty Points from Resistance

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The S&P 500 has now rallied 60 points, or 5.2% from the point Monday early afternoon when rumors began that the Chinese would be buying Italian bonds.  It remains a 'student body left' or 'student body right' environment (or in CNBC terms 'risk on' or 'risk off').   Buy everything - or sell everything.

Today is a great day where you see the market drives the news, not vice versa.  Unemployment claims came in above expectations and consumer price inflation came in hot (obviously the reality of the inflation figures are up for debate but that's besides the point).  In theory higher inflation should quell the Fed from further action because the official reason for QE2 was to stop any chance of deflation; now we just printed a 2% CPI figure.  I definitely don't think it will matter for Operation Twist next week, and Ben can claim he is creating jobs (or allow for higher inflation rate target) when he brings on QE3 later in the year or in early 2012.



Whatever the case we're now 20 points away from the level that last caused the market to pull back.  Until the S&P 500 gets back over that 200 day moving average around 1250, this remains a traders market with short time frames - buy the dips, sell the rips, etc etc.

I will repeat what I have been saying the past few weeks - this hectic moves, up or down, are not healthy.  They just feel better when they are up, instead of down.  Risk on!

EDIT 10 AM - it looks like markets are joyful due to a new global central bank intervention - remember, free markets love handouts or bailouts. ;) per Ritholtz

Today is September 15 — three years ago, Lehman Brothers was allowed to do what insolvent companies are supposed to do — fail.  Hence, it is only fitting that five Central Banks arranged a massive liquidity operation to banks. There will be “three dollar-liquidity providing tenders before the end of the year in a coordinated move to offset shortages of dollars at European banks and businesses.”


Although this could be looked at as awful news — more economies and banks in such dire straights as to need yet another central bank bailout, moral hazard notwithstanding — the kneejerk response was relief. Dax is up 4%, US futures  flipped positive, Dow now up 100.

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