This has been a wild week with news, particularly Bernanke’s testimony. I was beginning to think Monday’s selloff was the start of a necessary correction. But there was little doubt that the massive computer was in with a heavy buy mode. The NYSE tick indicator has been rather muted for the most part. Failure to have high plus 1000 ticks is a sign energy has left this market. Early S&P 500 prices this week were in the neighborhood of the close at the end of January. The bears had a chance to register a negative February, but were once again ripped short and defied gravity. There is resistant at 1522, then 1530 as the next chart resistances of consequence.
Do not forget that the publicized dollar allocation into debt instruments is 85 billion per month. With a shortened month, the allocation can be spread into tighter periods which can create more movement. The bonds were recipients of the bulk of these monies in the latter two weeks of February, particularly the last 5 trading days. Therefore this money has now shown its power but with March even in the same installment amount there are more days to absorb the influx. There was a 3 day influx of heavy buying into the stock market. The final day of the trading month always prompts portfolio adjusting and it was transparently clear the Fed did their appropriate actions. I say this with tongue in cheek as Bernanke’s two favorite words (said in monotone) are transparency and appropriate.
Thursday’s trading session was slow. Several news item releases have yet to impact the market on a significant scale. The GDP report is no exception. The pushes to the upside recently have not had the same energy of previous weeks. We are into a period whereby the overbought situation could benefit a greater correction than so far. In the mean time, there are many opportunities for quick pull-the-trigger trades to bring in small profits. Stay alert!