Bernanke Drops The Big One

I had to step out this morning, right after the FOMC decision (which I have not, nor will I likely, read, so I can’t tell you what the details are), and I was hoping to get back before the clsoe, just in case I had to do some feverish selling. I didn’t get back in time, but it appears I didn’t need to do the selling, either. the wait is over, QE3 is here. That brings up several questions: Howlong will this QE rally last? Will we get diminishing returns? Is the Fed panicking? and finally, What are the long term consequences? Well, I can’t answer any of these questions, but what i can do is look at the charts and trade what I see now. I think it is safe to say the the target for September, up around 1467, is a pretty reasonable target now. I also am convinced that this rally will be the final move up in the 2009-2012 bull market. Whether it ends before or after the election is unknown, at least to me, but it will end, sooner rather than later, and the hangover is going to be a bitch.

 Someday AAPL is going to come out with a new Iphone and the general reaction is going to be, “who gives a flip?”, but so far AAPL has managed to pull another rabbit out of there hats, and it appears people who just spent hundreds of dollars upgrading their phones are going to do it again. The Nasdaq 100, which had started to lag again, made a nice move today, got big volume, and is headed for a breakout. It still looks a little on the weak side, and if it doesn’t pick up some strength, I;m not looking for a long rally.

 However, teh Russell 2000 has made a magnificent move since the beginning of this month, and lookes to be going to new 2012 highs. It is still well below the 2011 highs, but a move like this is going to have a big influence on the rest of the market. 

 I have been waiting for the percentage of stocks above the 50dma to really make a move up. Last month they did it briefly, and I thought it might be the big one coming, but it didn’t happen. It looks like it is going to happen now. Look for this to peak, probably withing a month.

The same indicator on the Nasdaq, which is still lagging, but now above bull territory. This may take a little longer to peak, but not by much, and may fall harder. But eventually, it will fall.

I don’t know the details, but from the headlines, it looked like Bernanke dropped the big one today. He is clearly trying to kick the can into the next Fed chairman’s term (which I believe starts in January 2014), but may not have kicked it far enough. I will be sweet justice to see him have to deal with the fallout of his own actions.

I will have the new highs update shortly.

2012-09-14 13:00:33

Source: http://samuraitrader.blogspot.com/2012/09/bernake-drops-big-one.html