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The Bernanke Speaks... Says Little.....

Stock-Markets / Stock Markets 2011 Apr 28, 2011 - 03:19 AM GMT

By: Jack_Steiman

Stock-Markets

And that's how you know he did a great job. He wanted to say as little as possible because it was in his best interest to keep things just as they are right now. He wants to keep the stock market humming along. Don't disrupt what isn't broken because it's a healthy stock market that makes him look good. A healthy market means a healthier than thought possible Main Street. Main Street would be a ghost town if it weren't for his monetary policy of pump, pump, and pump some more. Pumping dollars that is. He told us at 12:15 Eastern Time that things will remain status quo. No real changes. Monetary policy will remain favorable. Rate hikes are not in the immediate future.


When he was questioned at 2:15 Eastern Time he basically told us that the core inflation numbers had to bump up a bit from 1.0 to 1.3 projected to 1.3 to 1.6 likely for the rest of the year. The market was expecting that, thus, no negative effects were felt. He did say he expected unemployment to go from a projected level of 8.8 to 9.0% to lower levels at 8.4 to 8.7%. If it happens that would be great but the market liked it enough to counter the BAS news from core inflation. We can spend days, if not weeks, discussing what's true and what isn't, but we won't because it simply doesn't matter. All that matters is what the market thinks of his words, and, overall, it liked them.

The market held some gains, and in fact, closed over the breakout levels of 2840 and 1344 for the second straight day, and now his work ism done. A strong move across 2861 would be great and we are right there. Clearing by a few points is not a breakout but a forceful move, or 1% above, or 2890 would really cement things for the bulls and bears alike. So the Bernanke spoke and did what he could to keep a bid under the market. A good day for him as his goal was achieved. Do nothing to hurt the stock market. If it falls, he doesn't want it to be because of something he did or said. He truly is a protector of this market.

Some sectors are responding well within this bull market and some are not. Commodity and material stocks continue to outperform. Financials are not performing well whatsoever. Stocks such as The Goldman Sachs Group, Inc. (GS) just can't buy a bid and have yet to flash a bottoming stick off its huge down trend. No Doji or gap down reversal hollow candle. It tells us all that this market is not a bull market for everyone, but rather a bull market for certain sectors over others. That's a good thing as it makes you work for your dollars. When markets are good all over the froth is out of control. Don't get me wrong, this market ultimately is all froth, we all understand that, but this type of froth is healthier. At least it's not a throw a dart market.

Sentiment figures were out today and they showed that the bulls are still a bit frothy, but not at the peak levels we saw three weeks back when bulls overwhelmed the bears by 41.6%. Not good for a bull market. A pause was needed and the market got one, but the figures are still high at 35.8%. Those aren't the type of numbers that have to hit a market immediately when you have massive liquidity hitting from all sides thanks to the Bernanke. In the most frothy of bull markets those levels between the bulls and bears can reach over 505, but once you start hitting 40% it's not good. Even 355 isn't a very good number. It doesn't mean you don't play. It means you're a bit more cautious for sure. Those numbers are running into powerful liquidity, which is neutralizing the headache for now. Something to watch closely in the days, weeks, and certainly the months ahead if this market can make its full measurement that the patterns are suggesting.

The measurements are fun if you're a bull, but by no means are a guarantee to occur. If you take the inverse head-and-shoulders pattern on both the S&P 500 and Nasdaq you have the possibility of S&P 500 1330 and Nasdaq 3080 over time. Nice fantasy, but certainly possible, based on the length of these patterns in place. Something can always come up to take these numbers and make them look foolish. No argument there, but if you don't respect the possibilities then you are doing yourself an injustice. We don't worry about these figures though. We take things day to day as always and play what we see in the moment. Short-term charts get overbought and need to pull back. Earnings are bad for an evening and we pull back. Always excuses to sell, but the bigger picture still looks good for the moment. Staying long for now.

Peace,
Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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