Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
While many of the gains since 2009 have come in premarket, this has to be one of the longest streaks where almost ALL the gains have come since the June bottom. The only day I can think of in this string is last Friday where a gap up was met with selling but then a larger rally as the day ensued. But even that day began with a gap up. Today’s catalyst are comments from Bernanke of a dovish nature at a Q&A yesterday after the close.
- “Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said yesterday in response to a question after a speech in Cambridge,Massachusetts. “It may well be sometime after we hit 6.5 percent before rates reach any significant level,” Bernanke said. “So again, the overall message is accommodation. There is some prospective, gradual and possible change in the mix of instruments, but that shouldn’t be confused with the overall thrust of policy which is highly accommodative.
- The 59-year-old Fed chief said the FOMC may opt to holdinterest rates near zero even after unemployment reaches 6.5 percent due to the possibility of low inflation. Also, the jobless rate may understate the weakness in the labor market, he said.
I would not say much new was addressed here, other than an admission that the unemployment rate is flawed in terms of showing “strength” due to all the labor force dropouts. Hence “rate may understate the weakness”. He reiterated a point that many seem to miss, in that 6.5% is not a goal or a level where policy will change but a moving goal post. All in all, not a ton of new points, but in an upward trending market a reason to roll up futures even further.
As for the S&P 500 we are in another of those V shaped moves, up 11 of 13 sessions from the bottom and today will be the 12th of 14th unless something dramatic happens. You can see after puncturing the lower Bollinger Band® in late June, we should be gapping up to the top one today. Talk about a 180 degree move.
Short term we should be approaching some short term overbought status but with the major indexes back above their 50 day moving averages, the bullish MACD crossover, a cross over the prevailing trendline (in orange) of 2013 on Tuesday, and some attractive technical formations in major sector charts the intermediate term has improved. The mid June highs will be cleared today and yearly highs will be bulls next target.
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