Daily Archives: December 12, 2012

12/12/12 FOMC Rate Announcement (by SB)

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Here is the link for today's (Wednesday's) FOMC press release
regarding their interest rate and asset purchase decisions following their
two-day meeting:
http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm

This
excerpt explains their current timeline and parameters relative to the continued
implementation of this low interest rate:

"In particular, the
Committee decided to keep the target range for the federal funds rate at 0 to
1/4 percent and currently anticipates that this exceptionally low range for the
federal funds rate will be appropriate at least as long as the unemployment rate
remains above 6-1/2 percent, inflation between one and two years ahead is
projected to be no more than a half percentage point above the Committee’s 2
percent longer-run goal, and longer-term inflation expectations continue to be
well anchored."

The Federal Funds Rate will be
maintained at 0.25%, as shown on the graph below.

Equity markets
rallied after this news
, and, on the Major Indices,
the SPX and RUT are currently trading above their major uptrend line from the
October 2011 lows, the DJI is backtesting its trendline, and the NDX is still
trading well below its trendline, as shown on the Weekly charts
below.

Bulls should be looking for the DJI to break and hold
above this trendline and for the NDX to follow suit (as well as for the SPX and
RUT to hold above their trendlines). Otherwise, we may see another break and
possible test of this year's lows, or lower.

Not Poised to Rally

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Well, the Federal Reserve has sped up the pace at which the United States will meet its ultimate ruin by pledging $85 billion of new cash a MONTH with no end in sight (except for a very-far-off unemployment goal that may never been reached). In spite of this utterly naked gift to investment bankers and stocks the world over, the NQ, as I'm typing this, is unchanged, and looking at the chart of the QQQ, it seems to me it isn't exactly postioned for an explosive rally.

We'll see if Cap'n Beard gooses anything with his press conference, but seriously, this is a vulnerable looking chart.

1212-QQQ

Santa Bear Comes to Town (by Phantomcapital)

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The Santa Claus Rally, yet another delightful story told to
the public by retail brokers, CNBC, and the rest of the warm and fuzzy spin
doctors of Wall Street.  But what happens
when the market wakes up and realizes that Santa, like the Easter Bunny and the
Tooth Fairy just isn’t real, but instead is something made up to make the kids
feel cozy and force the adults spend even more money? 
No this isn’t a bitter rant but instead a very real point that needs to
be made about the direction of the market over the next few months. 

First, here is the bear case for why the market can and will
go down.  First, tomorrow’s FOMC announcement.  I’m not exactly sure what Helicopter Ben can
say to further juice this rally. 
Anything short of the Fed announcing a bajillion dollars for every good
little boy and girl will either be a non-event or a disappointment.  Next, the Grinch masquerading around as the
Fiscal Cliff. 

The rally over the last
month has been in anticipation in the Fiscal Cliff being resolved.  So its resolution has already been baked into
the market.  Or, our glorious leaders
will do what they always do and fail in epic fashion to solve the problem.  Either letting the Fiscal Cliff pass with no
resolution or Obama ramming higher taxes through will be incredibly
bearish.  So again, the bears are in a “heads
I win, tails you lose” situation.  And
then lastly, there is my post, Bear Market Holiday Sale posted on November 19th.  That is what I’d like to discuss further. 

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Bullish Setup and FOMC Day (by Springheel Jack)

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In my last post of November, as NDX last approached 2700, I posted a chart talking about short term negative divergence on the NDX 60min chart and the possibility that a high quality IHS could form with 2700 resistance as the neckline and a target at 2900, over the current 2012 highs. There was obviously a not entirely dissimilar setup on the SPX chart but I dismissed that as the neckline started too early in the preceding decline to make it a reliable pattern in my view. Here is that NDX chart that I posted on 30th November:

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