Courtesy of John Nyaradi.
Two down, one to go as global financial markets, stocks and ETFs turn to Big Ben
Last week, Mario Draghi delivered his bond buying program. Today the German Constitutional Court signed off on Germany’s involvement in the European Stability Mechanism which is a key component of the European rescue plan, and tomorrow comes the main event, the FOMC announcement and “Big Ben’s” press conference.
Market players are betting on a new round of quantitative easing to complete the easy money trifecta, and Dr. Bernanke has to deliver or else markets will probably face a nasty case of the blues.
Major U.S. stock market indexes registered modest advances ahead of tomorrow’s pivotal FOMC meeting.
The Dow Jones Industrial Average (NYSEARCA:DIA) added 0.7%, the S&P 500 (NYSEARCA:SPY) gained 0.2%, the Nasdaq 100 (NYSEARCA:QQQ) climbed 0.24% and the Russell 2000 (NYSEARCA:IWM) tacked on 0.38% in response to the German court’s ruling and ahead of tomorrow’s FOMC announcement.
Gold (NYSEARCA:GLD) was mostly flat and silver (NYSEARCA:SLV) lost some ground, down 0.8% in a choppy day.
Everyone has been sitting on pins and needles regarding the outcome of today’s decision by Germany’s high court and the court came through with a decision that kept the European rescue plan alive.
However, the decision was not a blanket approval as the court decreed that anything beyond a 190 billion Euro contribution by Germany must be approved by Germany’s parliament.
In response, global ETFs rose with iShares MSCI Italy ETF (NYSERCA:EWG) climbing 1.3% on the hopes for better days ahead in Europe while most European bond prices fell.
Overall, breadth was positive with more than 80% of the NYSE stocks on point and figure “buy” signals.
Technical indicators remain in bullish configuration, indicating higher prices ahead.
Regarding tomorrow’s Fed meeting, many hints have been dropped that the Fed is moving towards a new, large scale bond buying program and/or keeping interest rates at today’s low levels farther out into the future.
The doves on the Fed appear to be pushing for a large, unlimited commitment to asset purchases while the naysayers are more actively pushing for no further action or just an extension of the low interest rate environment to an even farther point in the future.
Wall Street Sector Selector’s bottom line: Tomorrow is a pivotal day in the ongoing bull market as we hear from the Fed and Dr. Bernanke. A new, even possibly open ended round of quantitative easing could likely be the outcome and if that were to be the case, we can expect the current uptrend to continue.
Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.
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