First Close above the 200wkMa, based on Stochastics we are very much overbought and need a few days down. I would love to see a 5% correction, before we grind higher.
Futures were suggesting mild strength at the open as futures were moving up a little in response to the election results and the ADP numbers - but things were fairly quiet overall. ADP reported that the private sector job market gained ground during the month of October. The report shows that private sector jobs rose by 43,000 jobs during the month, which above the consensus expectations for a gain of about 21K. September’s report was revised to show a decline of just -2,000 from -39K.
The session of the greatly anticipated QE2 announcement opened without any significant gap and proceeded to trade within a tight range for 90 minutes. But around 11:00 am sellers hit the tape and worked the tape out of the intraday range downward several points. But as is the usual, bulls gradually pushed the tape higher into the FOMC announcement. And then the whipsaw began. The long bond was hammered immediately, my position in TBT soared, commodities that were down big all morning went up and down further and up flat than down, well I guess you know what I'm saying, it was nuts. Well they all ended up or were flat. Uranium miners (were on fire) and Crude were up before and ended up much higher by the close. and the SPX closed at the highs of the day 14 points off the lows.
The XLF which has been lagging, it was strong today and the Financials are likely to be a prime beneficiary of the Fed’s easy money policy. So this rally is likely to continue strong, even if there is a pullback.
The market got pretty much what it expected with the election and the additional Fed easing while many of the technicals are still calling for a breather and a pullback. Two of the three highly anticipated market-moving events of this week are now behind us and several of the indices are breaking out to multi-month highs. We have only seen one session of more than a 1% decline in the last two months. It can be argued that we are overdue for a two or three day pullback but we are also in an era without comparisons; the Fed policies are not just rare, they are unique. The market reaction may be as well.
For the SPX Index there were 277 Advancers/206 Decliners. On the NYSE 3,124 issues were traded with 1,721 advancing issues and 1,296 retreating issues, a ratio of 1.33 to one advancing. There were 225 new highs and 6 new lows. The five day moving average of New Highs is 188 while the five day moving average of New Lows is 13 and the ten day moving average of Net Advancing is 266. The Net Advancing data indicates a bullish trend.
The never-ending ramp continues. While New Highs are weakening, everything else in the NYSE breadth is reasonably strong and bullish.
Total tick for the day was 74,000 and the average tick for the day was 48. There were 104 ticks greater than 600 and 55 ticks more extreme than -600. There were 5 ticks greater than 1000 and 6 ticks more extreme than -1000. The tick action suggests institutional accumulation.
The intraday volume pattern was interesting as the volume was three times higher on the post-FOMC down move as it was on the up move.
GLD is overbought as well, see the red arrows on stochastics showing the cross down. Has lead to sell-off in GLD before, I would love to buy some back down to 121, would like seeing this thing breakout and go parabolic right now. Gold is still under owned to the tune of 8:1 in comparison with DJIA.
Silver took out resistance from 7/08 and went ballistic. Again the weekly stochastics are telling me this thing needs a break but it still keeps going higher. I can't short this any more, took too much pain. (see Robert Griffiths interview on Kingnews link).
Went long TBT at stochastic crossover, has paid off finally as you can see a break in major support followed by the FED pushing up yields with QE2, people running out of bonds, see previous post how to make money from QE2. TBT breaking out of range, so you haven't missed this move.
Long-term (Riding secular trends): Long: TBT, GLD, SLV, MOO, Uranium (basket of stocks), UNG, XLE, GDXJ and DBA
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