Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Financial infotainment TV likes to tout each Fed meeting and employment report as “THE MOST IMPORTANT ONE IN THE HISTORY OF TIME.” The reality is most of them are snoozers other than the fact the algos react to headlines and then things return to normal. Much of it is major overreaction and media sensationalism. But this coming Fed meeting, due to where the market is technically, probably will have a lot of impact. For roughly 3 weeks we have been in correction mode, traveling from end to end of a now apparent descending channel. Volatility has increased substantially and gapping up and down due to overseas news (currently Japan) has returned as the norm. In a way I think Bernanke wanted that as things were going far too linear until his testimony on May 22. They won’t say that of course, but the “bulletproof” nature everyone was feeling, along with nascent bubbles in certain areas (farmland, art) were surely of concern, even if they don’t admit it.
With that said, unless there is a major rally or major breakdown in the next 3 days we will enter one of the 4 meetings of the year there is a news conference within this channel. Technicians will be looking for a breakout to the upside and out for the bullish case, or a continuation down for the bearish. With all the attention on tapering (which is the incorrect word…. it is plateau-ing) all eyes will focus on Bernanke for this that or another hint one way or the other. Basically this is what the market has become – Fed watching.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
