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That's the message I heard in today's press conference from Fed Chairman, Ben Bernanke, following the release of today's FOMC statement. As he mentioned, the current unemployment rate is above the Fed's targeted range, while inflation remains contained within the upper end of their current targeted range. Since he is, apparently, prepared to give leeway over and above the current 2% inflation rate in order to ease credit to stimulate job creation and the housing sector, I can interpret that to mean that the markets, in general, are not yet overbought…my assumption is that news should be received favourably by the stock market bulls.
By the way, it seems to me that an apparently stable stock market (i.e. proceeding in an orderly uptrend and higher than today) by the time the 2012 U.S. election is underway would not give Republicans cause to complain about the effectiveness of President Obama's policy measures during his term in office…an "offshoot benefit" of this "dual mandate" policy. So, I'll say that greed is good, particularly for the Democrats this year. While the VIX remains at low levels, the fear factor is, indeed, gone.
Apple (AAPL) satisfied my preferred pattern action in reaction to earnings by thrusting above its 3-year upper channel boundary lines at 460-65. But thereafter it failed to hold above the top of the channel. This argues strongly that AAPL has put in a near-term spike peak ahead of a near-term topping process that will be followed by a correction into the low 400 target zone.
Ten Year: Since October the 10 year has remained in a tight range and now it is testing the top of this range at 21.00 or a 2.10% yield. TNX test the top of this range on Monday and has since backed off of it. Since October there has been a pattern in the market with TNX as it hits 21.00 . Each time TNX gets to this level it foreshadowed the next "dip" in the market. It occurred in November and December and also back in September.
Overall: Watch 21.00 on the then year, if it breaks above it the market will rally but as of right now based on some of the stalling action going on and the pattern that has formed with TNX a dip lower is more likely.
Some are born great, some achieve greatness, and some have greatness thrust upon them.
I'm a Shakespeare buff so you'll to put up with the odd quote. This one is from Malvolio in Twelfth Night and the relevance today is that the same sort of gradation could be applied to trendlines, which might then go:
Some trendlines are clear early, some become clear later, and some arrive so late that you've stopped looking for them
In this case the low yesterday on SPY and SPX was at rising support from the December 19th low. I've been complaining for weeks that the there was no decent support trendline from there, and I wasn't even looking for it yesterday. Nonetheless, it is now established and it is now therefore also clear that we are looking at a rising wedge from that Dec 19th low. We might yet see a new high within that rising wedge, but it should be marginal. Wedge resistance is under 1330 SPX and I'd be extremely surprised to see the wedge break up with confidence here. Here's the updated setup on the SPX 30min chart with the wave count: